What Is Considered a Low Credit Score?
It is so important to have good credit these days. It seems like someone is around every corner looking for good credit as a stipulation to lend money. This is just the way that the lending system works. Lenders want reliable borrowers to become their customers. Consumers must always keep a high credit score and know what is on their credit report.
A Low Credit Score
The credit score that consumers must have to be considered as someone with bad credit varies. As a general rule of thumb, most consider a credit under 600 credit to be bad credit and others consider anything above 700 as good credit. Many lenders will still consider consumers for loans with credit scores under 600.
With good payment history, lenders may take credit scores in the mid 600 range for mortgage loans and the mid 500 range for automobile loans. The credit score requirements vary greatly by the lender, and it varies by the purpose of the credit consumers wish to receive.
Ways to Raise Credit Score
- Apply for new credit. Applying for new credit usually is beneficial to someone who is rebuilding their credit or someone who want to raise their credit score. Making payments on time with new credit can quickly raise a credit score.
- Sign up for a credit monitoring program. Credit monitoring programs are not free but they are well worth the price that consumers pay. The program allows access to each of the credit reports and credit scores so that consumers get to see exactly what appears on their credit report. New reports and scores are available every few months. Consumers can easily detect activity or view accounts that do not belong to them.
- Apply for at least one credit card. Credit cards are very helpful in raising credit scores. The great thing about credit cards is that the slightest activity can help raise credit scores. As long as consumers remember to pay their bills on time and keep the balances low, their credit score will benefit.
- Pay bills as scheduled. When consumers pay their bills on time, they are helping their credit score tremendously. A good payment history is what lenders look for in potential loan customers.
- Apply for a small loan. Loans can help consumers prove their creditworthiness to lenders. For example, repaying a $100 loan according to terms can raise the credit score a great deal. Consumers can reapply for the loan until their credit score increases to the number that consumers desire in a credit score.
- Negotiate old debts. Old debts may prevent consumers from receiving future loans. Until the old debt is paid, consumers may have to accept a lower credit score for a while. Consumers should negotiate debts and request that lenders remove the negative information immediately so that their credit score can increase.
A low credit score varies according to the lender. A low credit score does not necessarily mean the consumers will not receive credit for lenders. Consumers should keep up with the information on their credit reports and know their credit score at all times.