Do you know what your credit score means? That number can have a bigger impact on your life than you might think. If you are considering applying for a credit card, buying a car or taking out a mortgage, you might find yourself wondering “Exactly what is a bad credit score?” We’ll take a look at those numbers and why you should care about them.
What is a bad credit score?
There are some general guidelines you can use to help interpret your credit score. Anything over 750 is considered excellent. A score from 700 – 750 is considered very good. A score in the 650-699 range is considered good or average. Anything from 560-649 will make it tough to get new credit and you will pay significantly higher interest rates. Anything below 560 would be considered bad credit. Obviously you don’t want to be in those last two categories. The actual score that consumers see may differ slightly from the score a potential creditor sees, due to differences in the formula used to calculate it, but the scores won’t be drastically different.
Why should I care if my credit score is bad?
Now that we have answered the question “What is a bad credit score?” you need to know why you should avoid having one and start fixing it as soon as possible if you do. Your credit worthiness is a big part of your life. Most people realize they face higher interest rates on loans and credit cards, or may be denied credit entirely. But a bad credit score can affect other areas of your life even when you aren’t paying with a loan or credit card.
Most landlords will check credit. And you can be sure they will want to know if you pay your bills on time. Maybe you always pay your rent, but other credit problems could still mean you’ll be turned down for the apartment you really want. Mortgage providers will take an even closer look at your credit, so you may get turned down for a mortgage, require a bigger down payment, or only qualify for an amount of money that is much less than you need to get a home that is appropriate for your family.
A bad credit score can also mean having to put down deposits on your utilities. This can be a real pain when moving, and can end up costing a lot of extra money.
Difficulty getting a loan can mean you’ll have trouble getting a safe and reliable car. And insurance for that car may be harder to get and more expensive. Insurers are allowed to pull your credit report and score when you apply for any type of coverage. Provinces have different laws about what insurers can use this information for, but you can be assured that if they are looking at it, there will ultimately be some kind of an effect on your coverage.
Bad credit can affect your future too. Negative information stays on your credit report for several years. Many employers check your credit so your score can keep you from getting that job or promotion that you really want. And if owning your own business is part of your vision of the future, getting a small business loan can be a problem too.
If you need help with your personal budget and want to improve your credit score, credit counselling can be extremely helpful. Contact Credit Counselling Services of Atlantic Canada today at 1-888-753-2227 or via our website to discuss your situation with one of our counsellors.