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What is bad credit?

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Bad credit is a term used to describe a low credit score. Your credit score is a number that represents your creditworthiness, or how likely you are to repay borrowed money.


Credit scores range from 300 to 850, with higher numbers indicating better credit. A score below 580 is generally considered bad.


 

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But what exactly causes bad credit?

  1. Missed Payments: If you don’t pay your bills on time, it negatively affects your credit score. This includes credit card bills, loans, and even utility bills.
  2. High Debt Levels: Owing a lot of money, especially if you’re close to your credit limit on credit cards, can lower your score.
  3. Bankruptcy: Declaring bankruptcy severely impacts your credit score and can stay on your credit report for up to ten years.
  4. Frequent Credit Applications: Applying for many credit cards or loans in a short period can be a red flag for lenders, suggesting you might be in financial trouble.
  5. Defaulting on Loans: If you fail to repay a loan, it significantly hurts your credit.

Having bad credit can make life more challenging. It can be harder to get loans, and if you do, you’ll likely face higher interest rates. It can also affect your ability to rent an apartment, get a job, or even get a cell phone plan.

Bad credit finance brokers

If you have a bad credit history and need a loan it is worth using a finance broker, like Zoom who specialise in bad credit loans.  We compare over 30 lenders to get you the best deal possible.

We know exactly what the different lenders are looking for, so we are your best chance of getting approved.

You can improve your credit score

  1. Pay Bills on Time: Always try to pay at least the minimum amount due on time.
  2. Reduce Debt: Pay down your existing debt and avoid using too much of your available credit.
  3. Limit New Credit Applications: Only apply for new credit when necessary.
  4. Check Your Credit Report: Review it for errors and dispute any inaccuracies.

What is bad credit?

Bad credit is when your credit score is low, indicating you’re less likely to repay borrowed money on time.

Improving your credit score takes time and effort, but it’s worth it. Better credit can open doors to more financial opportunities and help you achieve your financial goals.

If you need a loan whilst you still have bad credit contact us today to see how we can help.