Credit Score is the very basis that determines whether you are good enough to be lent some money from an accredited institution. Very often people seem to be surprised when they are exposed to the truth of bad credit score. Some do not seem to understand it completely while others are in a state of surprise as to why they received a low credit score.

In the following lines we will discuss and try to understand what determines a bad credit score. But before we get there let us have a look at the numbers which present a person’s credit score.

Now, a person with an excellent rating in this regard will have a score between the range of 700-850, following closely a score of 680-699 is considered to be good, while an average score exists in the range of 620-679 and scores below 600 are considered to be low. Even the range 580-619 is considered low while poor and bad scores consist of the range 500-579 for the former and 300-499 for the later.

A credit score is determined by the person’s former record of repaying credit- for instance credit cards, loans etc. Whenever a person fails to repay the outstanding credit or delays the payment, the credit score gets hampered. Each default on payment is an opportunity to make your credit rating negative while timely payments and no defaults lead to a good credit score.

A bad score reduces your eligibility to get an auto loan, mortgage, interest free credit cards and gives a chance to the institutions to dictate the terms of lending because of the poor rating evaluated. In case you wish to refinance your loan at a lower rate or extend the duration of your outstanding payment, you will end up paying a lot more in interest than the person who has a good credit score.

Therefore, it is advised to get your credit rating evaluated in advance if you are planning to borrow some money for any purpose. Always maintain a clean record when it comes to outstanding payments and enjoy the best deals that the lending institutions have to offer.