What Is a Bad Credit Score?

There has been increasing discussion around good and bad credit scores—and for good reason. Many people are realizing that a low credit score is holding them back from major life goals like buying a home, financing a car, or even qualifying for certain educational opportunities.

But what exactly is considered a bad credit score?

Over the years, credit score standards have shifted. Scores that were once considered “good” are now often categorized as “fair,” making it more difficult for consumers to qualify for prime interest rates and favorable loan terms.

What Is Considered a Bad Credit Score?

A bad credit score can vary depending on the type of credit you’re applying for, but understanding general ranges can help you make informed decisions.

Here are five important things to know about credit scores and what qualifies as bad credit:

1. A “Bad” Score Depends on the Type of Credit

Credit requirements vary by lender and product. Mortgage loans typically have stricter standards, often considering scores below 640 as poor. However, some loan programs may still allow approval with lower scores under specific conditions.

2. Credit Cards May Approve Lower Scores—At a Cost

Many credit card companies will approve applicants with scores in the high 500s to low 600s, but these accounts usually come with higher interest rates and additional fees that can make borrowing expensive.

3. Scores Below 500 Are Considered Very Poor

Credit scores under 500 are generally viewed as very bad. Consumers in this range often struggle to qualify for unsecured loans or credit cards. While this can feel discouraging, it’s important to know that credit scores can be improved with the right strategy and consistency.

4. Credit Scores Can Drop Quickly—but Take Time to Rebuild

It doesn’t take much to damage a credit score. A single late payment, a medical bill sent to collections, or a bankruptcy can lower your score by double digits in a short period of time. While damage can happen quickly, rebuilding credit often takes months—or even years—of consistent effort.

5. Bad Credit Means Paying Significantly More

Consumers with low credit scores often pay nearly double the interest rates compared to those with scores above 640. High-interest auto loans and credit cards can drain finances and make it harder to get ahead. In some cases, saving cash and delaying financing may be a smarter option than accepting costly loan terms.

Why Understanding Your Credit Score Matters

Knowing how your credit score impacts interest rates, loan approvals, and financial opportunities is a critical step toward rebuilding credit. Before applying for new credit, it’s essential to understand where your score falls and how lenders are likely to view it.

Avoid making assumptions about whether your credit is “good” or “bad” without reviewing the facts. Be cautious when applying for new credit offers, especially those with high interest rates or hidden fees that could push you further into debt and negatively impact your score.

With the right knowledge and guidance, even a bad credit score doesn’t have to be permanent.

Understanding your starting point is the first step toward making smarter financial decisions and improving your credit over time.