ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Personal Finance»
  • Managing Credit Cards & Payment Options

How to Know When You Truly Have a Bad Credit Score…

Updated on May 10, 2016

Just what is a bad credit score? To the average consumer, having a bad credit score can take on several different meanings. But for a consumer that will be in the market for a house, car, or even a personal loan of some kind, a bad credit score can mean all-around bad news. A bad credit score doesn’t suddenly show up on a consumer’s doorstep and lands inside his or her lap. Like anything good and bad, a bad credit score is the result of some kind of bad action—namely, in the world of consumer credit, for every bad action there’s an even worse reaction. Perhaps a consumer has just been laid off; maybe it’s a situation where a death in the family has caused major financial blunders; more than likely, most consumers just simply fall behind on their payments, which seems to always do the trick.

FICO Scores Rein Supreme…

Here’s the thing about today’s credit scoring model: in the world of credit scores, FICO (or Fair Isaacs Company) has a virtual monopoly. In fact, the second in line, which is the VantageScore system, created by Experian, isn’t even remotely considered a competitor. This statement holds true based strictly on the grounds that very few lenders will ever pull your VantageScores. If you want a mortgage, a car loan, or any kind of financial product from a commercial bank (or a credit union for that matter), FICO’s scoring model is considered the industry standard. To VantageScore’s credit, they have been making some improvements to its credit scoring model, adopting more features from FICO’s scoring model, including offering a scoring range between 300 and 850.

A Bad Credit Score is Determined by Lenders…

How do you know when you have a bad credit score? It’s simple: go to several different lenders of credit and find out. First and foremost, having a bad credit score isn’t as objective as many would lead you to believe. The system varies. The thing that can get perplexing to many consumers delves from this very same logic: “How do you know which lender’s scoring model is correct?” The short answer is—you don’t. Which is why having a bad credit score sucks. Conversely, a person with a high credit score is showered with prime credit card offers and 0% APR auto loans for just showing up. Why? Because at a 750 FICO score and above, you as a potential borrower represents very little risk to a lender.

Credit Score and Its Different Uses…

Exactly what are credit scores used for; and why should you be concerned if your score is good or bad? In brief historical review, FICO scores came into existence as a result of huge demand by the lending institutions themselves, who needed a way to expedite his or her decision making process. What can a three digit number tell you about a person? Absolutely nothing! But from the vantage point of the lenders who adapted this scoring model, early on, they learned that a number could immediately gauge whether or not that person was bankable or not. On a positive side, if the score isn’t terribly bad, then chances are you’ll pass the decision making process, but will rightfully be penalize with higher finance charges if it’s not up to industry standards. Buyer beware: credit scores have several different uses to a lender of credit. Alas, credit scores are useful in a variety of ways, but for the most part, they are used for the following financial purposes:

  1. To decide whether to extend credit to you or not.

  2. If approved, how much credit to extend to you.

  3. Once your limit is established, to decide whether or not you’re capable of higher credit limits.

  4. And if the credit market slows down, (as it did the aftermath of the “Great Recession of 2008-2010”), a low credit score can most certainly be the determining factor in whether or not your credit limits are decreased as much as 50%. (Some lenders may even close riskier accounts altogether.)

  5. To determine the interest rate you’ll get charged for a loan, or in the case of an insurance company, the discount rate they may offer you on an insurance policy.

In final, there really isn’t such a thing as a "bad credit score," –namely, the number itself represents no particular value outside of a lender’s greater discretion. In essence, a credit score is only bad when it prevents you from reaching any of your financial goals—be it a new home, a car loan, or even the best deals on your auto insurance.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: ""

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)