The words "bad credit" conjure up such negative images, don't they? That's because those two little words aren't
exactly what people want associated with them. When you have credit that's bad, you are almost marked when it comes to
obtaining things like cars and homes. It's like you're wearing a sign around your neck proclaiming that you got into
trouble with credit and now you have BAD, AWFUL, CREDIT!
Well, don't worry; there is help for people with credit that's bad. The first thing we need to do is get
past the stigma associated with these words. Bad or poor credit simply means that you have overextended yourself
when it comes to using credit and you want to work your way out of that state and get GOOD CREDIT!
How do we define bad or poor credit? Well, most financial lending companies will classify you according to your credit score,
also known as your FICO score. This score is calculated using a highly secretive formula developed by the Fair Isaac
Company and kept under lock and key with the Federal Trade Commission's blessing.
FICO will evaluate your credit history and then assign you a three-digit number that determines your credit
worthiness and your ability to repay any loan you are applying for. It doesn't reflect who you are as a person, it
reflects your past payment history when it comes to your debts.
You are considered to have poor credit if your FICO score is less than 620.
The median credit score for most Americans is 723, so anything less than 620 virtually guarantees
that you will not be approved for a loan you might be seeking. That's because you are considered to have a
negative credit history and seem to be unreliable in paying back your debts.
If you do have poor credit, don't worry yourself too much. Sure, it's something to be concerned about, but repairing your credit
can be done and you can get away from that bad credit stigma with a little hard work on your part. It's never too late to
repair your credit and heal your negative credit history.
One place to start is to pay down your debt and stop using credit immediately. You'll need to work with your creditors to
make a repayment plan that will work for you. Of course, there are a lot of other things you can do to get away from a negative credit rating and into good credit.
Look for books, software, and information that can help you with your problem credit.
They can help guide you toward repairing your credit and making that bad credit history a
stigma that doesn't define you but reflects your past and how far you've come since then!