How Does A Bad Credit Score Affect You and How Can You Improve It?

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credit score

Building a good credit rating, also known as credit score, is of vital importance because it can have an effect on your ability to access loans or products such as credit cards.

A bad credit score is a record of failures you made in the past while fulfilling payments agreements you made with creditors.



Consequences of having a bad credit rating

Typically, a negative credit rating makes it quite difficult to get approved for new credit as you have not paid your previous credit on time or paid them at all. Legal judgments, bankruptcies, or federal or state liens against you can also harm your credit score.

Lenders use your credit score to know if you are a good credit candidate. A low credit score may make it hard to get credit because it flags you as a risk. If creditors lend you money when you have a negative credit rating, you’ll most likely end up paying more in charges and fees because you may be eligible only for a higher interest rate.

Depending on the scoring system, credit rating can range between 300 to 850 points. The lower the number the worse your credit rating. Although each creditor determines what it regards as a bad or good credit rating, here is a general breakdown to give you an idea of where your score lies.

  • Very good/excellent credit rating: 700-850
  • Good credit rating: 680-699
  • OK/average credit rating: 620-679
  • Low credit rating: 580-619
  • Poor credit rating: 500-579
  • Bad credit rating: 300-499

The average American credit rating lies at 682. It is also important to have in mind that consumers whose ratings are below 620 are considered as credit risks by many creditors in the U.S. Most people are often put in situations where they have bad credit scores when they mismanage their finances, lose their jobs, or when the economy is not doing well.

A negative notation on your credit report can take up to seven or more years to disappear from your credit history. However, you don’t have to stick around with a bad credit rating throughout your life. Here are two crucial things you can do to improve your credit score to ensure it’s in the best shape.

Make timely payments in full

The key to improving, or establishing a good score is making payments in a timely manner and in full. Aim to pay as many monthly balances as you can, every time and on time, since details of your payment history (such as missed or late payments) may remain on your credit report for several years and are considered public.

A popular way to do that is by using the debt snowball method, in which you settle the smallest of your bills first, then work on the next biggest. Jennifer Bailey, a lifestyle blogger applied this method to pay off $11,000 in credit card debt and $25,000 in student loans.

On top of that, aim to cut your credit utilization rate, as well, which is the ratio of the amount you have spent on your credit card versus the limit of the card. The smaller that percentage is, the better it is for your credit score.

Don’t erase your old debt from your credit report

One of the best ways to lift your credit score is by leaving old debt repayment records on your credit report for the longest time possible. If you pay and handle a debt as agreed, don’t get rid of its record on your report as it helps to improve your credit rating.

Review your score periodically

Check your credit rating from time to time in order to know how you are doing. Note that it is okay to request and check your credit report from an organization approved to offer credit reports. You can also find out your score free of charge from your credit lending agency to keep track of your progress.



Regularly checking your credit rating can be an effective method of preventing some score killers (such as identity fraud) that are out of your control. It is always advisable to go through these things at least twice, even just for your own peace of mind.

Final Thoughts

Nothing you read here about the topic will affect your credit rating more effectively or faster than paying bills in a timely manner. Avoid convincing yourself that you don’t have time to pay a certain bill since you are busy.

Remember that it’s important to pay that bill off than to fall into debt. Moreover, use your credit cards carefully even if you have a higher credit limit. Have in mind that paying your debts in full and on time could lift your credit rating to the coveted 800.

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