If you have a bad or weak credit rating, you may find it quite difficult to obtain new forms of credit, such as a car loan, mortgage or credit card. While there is no single definition of what constitutes a week credit rating, you can generally get an idea of how bad your credit is by finding out your credit score.
Credit Scores
Every individual consumer who has ever used any form of credit has a credit report. These reports contain the details of how you have used credit. Some companies take that information, assign it a point value and determine your individual credit score. In general the higher your score is the better your credit.
FICO Score
One of the most commonly used credit scores around is the FICO score, a score that ranges from 300 to 850. The Federal Citizen Information Center reports that borrowers with a FICO score of 600 or lower are generally considered risky. This means that if you apply for credit with a score of about 600 or lower, your creditor will view you as more risky than most other borrowers and will be unlikely to grant you a loan with competitive rates.
Other Concerns
A weak credit history is not only detrimental to your ability to find new loans, but it can also significantly impact other aspects of your life. For example, some employers, especially government employers that require security checks or security clearances, view people with a bad credit history as more risky than those with a positive history. This is because employers see those who have difficulty controlling their credit as those who may fall into financial hardship and possibly resort to unethical or illegal means to make ends meet.
Fixes
If you do have a weak or bad credit history, it doesn't have to follow you around forever and you can take steps to improve both your credit report and your credit scores. Lenders want to know that the money they give you is in safe hands and will not go unpaid, so the best way to show that you are not a risk is by paying all your bills on time and not getting or using more credit than you can afford.
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