There is no question that the housing market and economy have changed quite a bit over the last few years. As more people have lost their jobs, this has left some individuals in a financial crunch that is hard to cover from quickly. People who previously had great credit scores have found themselves at the bottom of the credit score barrel wondering how they will ever climb back up. There has also been a lot of talk back and forth about what constitutes a good credit score these days. The question is, what is a poor credit score?
How Do Credit Scores Work?
What constitutes a poor credit score is very subjective depending upon why you need your score at the present time. Having a good score can mean the best interest rates and terms whenever you need to borrow money for anything. However, having a bad credit score can really hurt you in a number of different ways.
Credit scores fall between 300 and 850. The national average credit score is about 675. Anything over about 720 indicates that you have handled most of your debts properly over the history of having credit. It usually means that you pay your bills on time and you don’t over extend yourself by getting in too much debt at one time. This lets creditors know that she would be a potentially good risk so that they can make a loan to you.
What is Considered Poor?
Having bad credit usually means that your score is below 620. This can affect you greatly when you apply for a mortgage. In fact, because the mortgage qualification regulations have changed so much in recent years, it can even keep you from getting a mortgage loan. Of course everything is negotiable depending upon how much money you have to put down and additional factors that your lender may want to know about your history. Anything under that 620 mark is considered to be subprime in the mortgage industry. You will probably be charged higher rates if nothing else.
How Can Having a Poor Score Hurt Me?
You have to remember that a poor credit score can also affect you in other ways aside from just getting a mortgage. Obviously, you may have a hard time getting credit cards with a low score. If you do get a card, you may have to get a secured or nonsecured version to prove yourself before lenders will be willing to give you the traditional credit card.
Having a poor credit score can also affect you being able to get a consumer loan when you want to buy a car, for instance. It can also hurt you on being able to get insurance such as homeowner’s or automobile. This is because insurance companies have found that people with low credit scores are statistically more likely to end up filing claims.
Believe it or not, your credit score can also affect you being able to get a job. More and more employers are checking people’s credit scores before making a hiring decision. Having a poor credit score can keep you from getting the job of your dreams. If your potential employer asks you to sign a paper allowing them to do a credit report, it might make sense to come clean so that you can explain why your credit has gone down.
