Understanding Bad Credit Score

When it comes to your credit score, the industry has divided the categories into. You’ll either have a good credit score or a bad credit score.

Having a bad credit score is obviously not good as it can affect practically all aspect of your finances. You'll have a hard time getting approved for loans and even mobile phone contracts. But do you really understand what a bad credit score really means? Before you can try to fix your bad credit score, it is important to first understand what it really means.

You need to understand that there are in fact different credit scoring models that are used in the industry today. Take for example FICO. The credit score range starts from 300 as the worst to 850 as the best possible score. Obviously, you'd want your score to fall somewhere the 850 mark to ensure that you're making a good financial impression among providers and lenders.

Also remember that FICO as well as other companies that develop the credit scoring system do not label consumers as one with a bad or good credit score. Credit reporting agencies do not do it either. At the end of the day, it is your provider or lender that decides whether your score is good enough for their qualifications and standards.

Just because one mobile phone provider, for instance, rejected your application doesn't mean you'll get rejected again if you apply from another provider. Your credit score is only really bad if and when you are prevented from getting approved for credit or something you applied for. But just the same, you need to be responsible with your credit rating. To avoid getting complications when applying for a mobile phone contract or a personal loan, make sure you pay your dues on time all the time.

For more info on credit score, check out http://www.equifax.com/credit-education/credit-score/.