1. A poor score is somewhat subjective depending on the type of credit a person is applying for. Home loans have some of the strictest credit standards while department store credit cards have fairly lax standards. Home loans will typically consider anything under 640 as a poor score, but that doesn’t necessarily mean it is impossible to get a home loan under some programs.
2. Credit card companies will often offer credit lines to those with scores ranging in the high 500s and low 600s, but the interest rates will be less than prime. There may be additional fees tacked on as well.
3. When talking about what is a bad score, it is important to understand that scores under 500 are considered very bad. People with scores that low will struggle to get unsecured loans or credit lines. However, it isn’t the end of the world. It is possible to raise a score.
4. Unfortunately, it doesn’t take much to knock a score down. One late payment, bankruptcy, or medical bill sent to collection can reduce a score by double digits. It takes very little time, a matter of months, in fact, for a score to be negatively impacted, but it can take several months, if not years to repair.
5. Consumers with scores that fall into the poor credit range will pay close to double the interest rates compared to those with scores above 640. It is very costly to get an auto loan with interest rates that are essentially punitive. Many consumers would be better served to save the cash in a bank and buy what they need outright rather than take out a high-interest loan.