Bad credit consumers hurting from tighter lending practices

Credit scores play an important role in securing financing for major purchases, including a new home or car. They also factor into approvals for credit cards and private student loans.

Prior to the economic collapse, lenders were less strict about extending financing offers, but that has since changed, according to a recent report from the New York Daily News. Consumers with a FICO credit score in the 500 range used to be able to qualify for a federally backed home loan. Now however, they may have to raise their score by as many as 100 points in order to be eligible.

People's three-digit numbers also play a role in their qualifying interest rates. The better the score, the more likely their lender will assign a lower, more affordable rate.

Because credit scores carry such significant weight when it comes to financing major purchases, it's important consumers do everything they can to make sure their numbers are as high as possible.

One step individuals can take to potentially improve their credit is to review their credit reports for inaccuracies and unfairly reported marks, as removing these negative items can boost a score. The former is often easier to spot than the latter, which is why a number of consumers will work with a credit lawyer to help them identify marks that may not have been reported in compliance with federal guidelines.