What is a credit score?
[kred-it skohr] n. A statistical summary of the information contained in a consumer's credit report usually graded on a scale ranging from 300 to 850.
The definition is simple, but the implications of your credit score are far more complex than a three-digit number. Your credit score represents your financial reputation—used by lenders, landlords, employers and others—to determine your level of risk, responsibility, and overall character.
When is a credit score "bad"?
Negative items affecting your credit score come in many forms, including:
- Overdue bill payments
- Maxed out credit cards
- Charge offs and collection accounts
- Identity theft
- Excessive third-party inquiries, etc.
Each item is equipped with its own level of severity and the power to damage your credit score. Combined, their strength can cripple it.
Implications of bad credit
Bad credit won't impress lenders or landlords. In fact, they will likely view your unstable financial past as a good indication of future behavior. As a business risk, lenders will charge you higher interest rates, or simply deny you credit all together. Employers may pass you over in favor of an apparently more responsible applicant. Insurance companies may even charge higher premiums to compensate for your perceived high-risk lifestyle.
Is your credit score telling the right story?
Contrary to popular belief, not every person with bad credit deserves the "high risk" label. Millions of Americans have struggled to rebuild their credit and regain their financial footing. Cases of inaccurate information and other examples of unfair credit reporting may depict you in an unjustifiably wrong light. Does your credit score accurately reflect your past? The answer could change your financial future.
The proactive approach
If you suffer from bad credit, there is good news. Federal law requires that credit companies must follow explicit rules before being able to report personal information about you to credit bureaus or anyone else. When they don't, or when they report items in error, you have the right to review, investigate, challenge, and even dispute such questionably negative credit report items. Not only can you move through the process alone, you have the ability to seek advice from qualified professionals. For 27+ years, Lexington Law has helped clients work towards fair and accurate credit scores by helping them enforce their consumer protection rights. Credit reporting is a complex process, but asking the right questions about your credit report doesn't have to be. Take a proactive stance against bad credit by reviewing your credit score or seeking help; your efforts could make all the difference.
Get a free credit report summary with credit score analysis now from Lexington Law! 1-855-255-0139.