Bad Credit

The words “bad credit” conjure up such negative images.  That’s because those two little words aren’t exactly what people want associated with them.  When you have bad credit, you are almost marked when it comes to obtaining things like cars and homes. 

Well, there is help for people with bad credit.  Bad credit simply means that you have overextended yourself when it comes to using credit and you want to work your way out of that state and get good credit.

How do we define bad credit?  Well, most financial lending companies will classify you according to your credit score, also known as your FICO score.  This score is calculated using a highly secretive formula developed by the Fair Isaac Company and kept under lock and key with the Federal Trade Commission’s blessing.

FICO will evaluate your credit history and then assign you a three-digit number that determines your credit worthiness and your ability to repay any loan you are applying for.  It doesn’t reflect who you are as a person, it reflects your past payment history when it comes to your debts.

You are considered to have bad credit if your FICO score is less than 680.  The median credit score for most Americans is 723, so anything less than 600 virtually guarantees that you will not be approved for a loan you might be seeking.  That’s because you are considered to have a bad credit history and seem to be unreliable in paying back your debts.

If you do have bad credit, don’t worry yourself too much.  Sure, it’s something to be concerned about, but credit repair can be done and you can get away from that bad credit stigma with a little disciplined work on your part.  It’s never too late to repair your credit and heal your bad credit history.

One place to start is to pay down your debt and stop using credit immediately - but don't close accounts since credit age factors into the score.  This is one of the biggest mistakes consumers make. You’ll need to work with your creditors to make a repayment plan that will work for you.  Of course, there are a lot of other things you can do to get away from bad credit and into good credit.

Expert Credit Consultants, LLC specializes in credit restoration and optimization. http://www.expertcreditconsultants.com