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What Is a Bad Credit Score? Understanding Credit Scores in 2025
July 1, 2025
Understanding Your Multiple Credit Scores
Most consumers don't realize they have multiple credit scores, and what's considered "bad" can vary depending on the credit-scoring models used and the type of financing you're seeking. Your credit report information from the major credit bureaus - Equifax, Experian, and TransUnion - forms the foundation of these scores, but several factors influence why these scores might differ.
The Role of Credit Bureaus
Your credit scores are calculated based on the information in your credit reports from the three major credit bureaus. Each credit bureau might have slightly different information about your credit history, payment history, and credit utilization ratio, leading to varying scores. For instance, some lenders might report your payment history to only one or two bureaus, creating discrepancies in your credit reports.
Different Credit-Scoring Models
Two primary credit-scoring models dominate the market: FICO® Score and VantageScore. While both models aim to predict creditworthiness, they use different algorithms:
- FICO® Score: Developed by the Fair Isaac Corporation, FICO has been the industry standard since 1989. FICO scores consider factors like payment history (35%), credit utilization (30%), length of credit history (15%), credit mix (10%), and new lines of credit (10%).
- VantageScore: Created in 2006 by the three major credit bureaus, VantageScore offers an alternative scoring model that may weigh factors differently than FICO.
What Constitutes a Bad Credit Score?
Let's break down what's considered a bad credit score across different scoring models:
FICO® Score Ranges
- Below 580: Very Poor
- 580-669: Poor
- 670-739: Good
- 740-799: Very Good
- 800+: Exceptional
TransUnion VantageScore 3.0 Ranges
- Below 500: Very Poor
- 500-600: Poor
- 601-660: Fair
- 661-780: Good
- 781-850: Excellent
Impact of Bad Credit Scores on Financial Opportunities
Having a sub-prime credit score can significantly affect various aspects of your financial life:
Lending and Interest Rates
- Higher interest rates on credit cards and loans
- Potential loan rejection for mortgages and auto loans
- Limited access to balance transfer credit cards
- May require a cosigner or credit-builder loans
Beyond Lending
- Higher insurance premiums
- Difficult rental applications
- Employment background checks may be affected
- Limited access to premium financial products
How to Improve Your Credit Score
If you're in the poor credit range, several strategies can help improve your credit score:
Monitor Your Credit Reports
- Use credit monitoring services
- Sign up for credit score alerts
- Dispute errors on your credit reports
Build Positive Payment History
- Consider secured credit cards
- Look into credit-building products
- Explore becoming an authorized user
- Use Experian Boost to include utility payments
Manage Credit Utilization
- Keep credit card balances low
- Monitor credit utilization ratio
- Consider debt payoff strategies (debt avalanche or debt snowball method)
Maximize Your Credit Card Rewards While Building Credit
While working on improving your credit score, it's essential to maximize the benefits from your existing credit cards. This is where Kudos comes in - a free AI-powered browser extension that helps you optimize your credit card rewards whenever you shop online.
Our Expert Takeaway
Understanding what constitutes a bad credit score is just the first step. The key is taking action to improve your credit health through responsible credit management and strategic financial planning.
Bad Credit Score FAQ
What is the lowest possible credit score?
The lowest possible FICO score is 300, while VantageScore 3.0 also starts at 300.
How long do negative items stay on my credit report?
Most negative items, including delinquencies and bankruptcies, stay on your credit report for 7-10 years.
Can I get approved for a credit card with bad credit?
Yes, options like secured credit cards and credit-builder loans are designed specifically for people with bad credit.
How quickly can I improve my credit score?
While significant improvements take time, you may see positive changes in 3-6 months with consistent good credit habits.
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Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
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