What is a “Bad” Credit Score?

Did you find your credit score lower than you thought? You might be wondering what the finance industry considers “bad” credit.

A credit score below 600 is considered bad credit. You may be eligible for a loan if you have low credit, but terms and rates might not be favorable. Fair credit scores are those with credit scores between 601 to 669. Continue reading to find out how credit scores are calculated and what credit scores matter.

There may be a lot of credit scores, and they might not all match one another.

It is important to realize that each consumer has different credit scores. So, “bad” can be a relative term depending upon how your score was calculated and what type of financing you are applying for.

The credit score provided by your credit card issuer with your credit card statement might be slightly different than the score you get from Credit Karma.

Hence, not all credit scores are the same. These are the three most common factors that can impact your credit scores.

Credit bureaus

The information in your credit reports determines credit scores. Equifax, Experian, and TransUnion are the three main consumer credit bureaus that collect credit information for accounts.

Lenders typically pull credit reports data from only one credit bureau when assessing your credit score. However, your credit report might look slightly different at each bureau. Maybe one of your lenders only reported your payment history to one bureau. Perhaps your credit report with one bureau contains an error.

A credit score based solely on one credit report may differ from one based on all credit reports.

Credit-scoring models

Credit-scoring models are the scoring system used to calculate your credit score. Fair Isaac Corporation developed the FICO(r), a credit-scoring model that is well-known. Since 1989, lenders have used FICO scores to aid in making lending decisions.


FICO isn’t the only credit scoring model. The three credit bureaus created VantageScore in 2006. Each model calculates its scores using its algorithm. Your VantageScore and FICO should be identical, but they could be different.

Both companies release updated versions of their scoring models periodically. Even if the credit-scoring model is identical, two lenders could have different credit scores. Find out more about VantageScore and FICO(r).

Industries and lending products

Notable scores are available for different types and types of lenders. FICO offers the following industry-specific scores in addition to the most popular FICO Score 8.

  • FICO Auto Score: Used for the auto industry
  • FICO Bankcard Score: This score is used in the credit card industry
  • FICO Score 2, 4, and 5: These scores are used in the mortgage industry

FICO uses a range from 300 to 850 for its base scores. FICO uses a range from 250 to 900 to calculate industry-specific scores.

What is a poor credit score?

Your credit score will vary depending on which credit bureau you use, the scoring model, and the financial product. What does a poor credit score look like for each product or model? Let’s look at some examples.

It is vital to have good credit

Good credit can be a benefit in many ways. One of the most apparent benefits is that you can qualify for lower interest rates on loans.

MyFICO May 2020 data shows that increasing your credit score from 620-639 to near 760-850 could reduce your monthly payment by almost $200. This is a huge deal!

Even if you don’t plan to apply for a mortgage, credit scores can still have an impact on your life. Credit report information can affect your eligibility for rental housing and your home insurance rates. It could also affect your job applications, depending on where you live.

There are many ways your credit score and credit report can impact your life. It’s crucial that you keep an eye on them both and take immediate action if you see credit file errors.