{"id":11700,"date":"2024-06-06T13:46:49","date_gmt":"2024-06-06T20:46:49","guid":{"rendered":"https:\/\/www.soundcu.com\/?p=11700"},"modified":"2025-10-15T14:35:54","modified_gmt":"2025-10-15T21:35:54","slug":"know-your-credit-score-what-good-credit-vs-bad-credit-really-means","status":"publish","type":"post","link":"https:\/\/www.soundcu.com\/blog\/know-your-credit-score-what-good-credit-vs-bad-credit-really-means\/","title":{"rendered":"What Is a Bad Credit Score? What Good Credit vs. Bad Credit Really Means"},"content":{"rendered":"<div class=\"co-flex_row co-flex_row__blue co-flex_row__next_row_diff co-flex_row__long-form-text co-flex_row__next_row__single-path-cta\" >\n\t<div class=\"co-flex_row--row co-row\">\n\t\t\t<div class=\"co-long_form\">\n\t\t\t\t\t<div class=\"co-long_form--block co-long_form--block__nomedia prow items-start \">\n\t\t\t\t<div class=\"co-long_form--text pcol-md:8\">\n\t\t\t\t\t<div class=\"co-long_form--content\"><h2>What Is a Bad Credit Score? What Good Credit vs. Bad Credit Really Means<\/h2>\n<p>Your credit score is like a bonsai tree: It requires careful tending and thoughtful behavior over time to produce the best results. Take good care with your credit \u2014 pay your bills on time and be a responsible borrower \u2014 and your credit score will help you qualify for the best terms on credit cards and loans.<\/p>\n<p>Although lenders are prohibited from making decisions based on a customer\u2019s gender or marital status, it wasn\u2019t always that way. Before the Equal Credit Opportunity Act of 1974, women were required to have a male cosigner on loans. Banks were also free to charge us higher interest rates or require us to put down larger down payments than men to get a loan.<\/p>\n<p>There are still some disparities in the world of credit, mostly due to salary inequality, which makes it more difficult for women to get approved for the best loan terms. That said, when it comes to the actual scoring, all that matters is how you handle debt. Knowing what a bad credit score is and the factors that determine your credit score will help you optimize this all-important three-digit number.<\/p>\n<h2>What is a Credit Score?<\/h2>\n<p>Your credit score helps credit unions, banks and other businesses decide how much of a financial risk you are. It\u2019s based on your history as a borrower, along with several other patterns of financial behavior. A credit score is a three-digit number that typically ranges from 300 to 850. If you have a low score, it can indicate to a lender that you could be more likely to pay late or default on a loan. Conversely, the better your score, the better the rates you\u2019ll qualify for with mortgages, auto loans, credit cards, and other types of loans.<\/p>\n<h2>What Is a Bad Credit Score?<\/h2>\n<p>A bad credit score is generally considered any score below 580 on the FICO scale. This range, 300 to 579, is categorized as \u201cpoor\u201d or \u201cbad credit\u201d by most lenders. A poor credit score can result in:<\/p>\n<ul>\n<li>Denials for credit cards or loans<\/li>\n<li>Higher interest rates<\/li>\n<li>Higher insurance premiums<\/li>\n<li>Larger deposits for rent or utilities<\/li>\n<\/ul>\n<p>If you&#8217;re worried about your credit score and want to learn strategies to improve, Contact Sound Credit Union today for support and guidance. We understand it can be confusing to determine what a low credit score is and how to rebuild your credit.<\/p>\n<h2>What Is a Good Credit Score?<\/h2>\n<p>A score of 670 or higher is considered a good credit score by most lenders. A score of 800 or higher is considered exceptional. According to <a href=\"https:\/\/www.experian.com\/blogs\/ask-experian\/credit-education\/score-basics\/what-is-a-good-credit-score\/\" rel=\"noopener\">Experian<\/a>, 67% of Americans have a FICO score of good or better.<\/p>\n<p>It\u2019s important to know that whatever your score may be, it\u2019s up to the individual lender to say if your particular score meets their criteria for a loan and at what rate. As an example, a score of 670 might qualify you for a loan at a favorable rate with one lender, but another lender could tell you they require a loan of, say, 700 or higher.<\/p>\n<p>One interesting thing to note: Women and men have nearly identical credit scores, on average \u2014 704 and 705, respectively, according to Experian\u2019s recent analysis of credit and debt data.<\/p>\n<h2>Who Decides What Your Score Is?<\/h2>\n<p>Your credit score is based on information in your credit reports or your credit file. Three main credit reporting bureaus \u2014 <a href=\"http:\/\/www.experian.com\/\" rel=\"noopener\">Experian<\/a>, <a href=\"http:\/\/www.equifax.com\/\" rel=\"noopener\">Equifax<\/a> and <a href=\"http:\/\/www.transunion.com\/\" rel=\"noopener\">TransUnion<\/a> \u2014 are in the business of gathering information for your credit file. They get that information from financial institutions and public records.<\/p>\n<p>The credit reporting bureaus provide the information that they\u2019ve gathered for your credit file to the credit scoring agencies. These companies then calculate your credit scores \u2026 yup, you have multiple credit scores.<\/p>\n<h2>How Many Credit Scores Do I Have?<\/h2>\n<p>You\u2019ve probably heard of FICO scores. FICO scores are based on a scoring model developed by one company \u2014 the Fair Isaac Corp (now known as FICO). But they\u2019re not the only game in town. There\u2019s also VantageScore, which the credit reporting bureaus started to compete with FICO.<\/p>\n<p>To make things even more complex, FICO and VantageScore also generate <a href=\"https:\/\/hermoney.com\/borrow\/credit-scores\/how-many-credit-scores-do-you-have\/\" rel=\"noopener\">multiple versions of your credit score<\/a> depending on what data is most relevant to its customers. For example, auto lenders have an industry-specific score, credit card companies have theirs, insurers, mortgage lenders and so on.<\/p>\n<p>Thankfully, all of your credit scores are based on your behavior as a borrower. So knowing one of your credit scores gives you a good idea of how you rate when other scoring models are used.<\/p>\n<h2>What Information is in My Credit Report?<\/h2>\n<p>Your credit file contains a history of your credit use, including how much money you\u2019ve borrowed, from who, going back how long, whether you pay your bills on time and if you\u2019ve recently applied for more credit. All of this information is used to calculate your credit score.<\/p>\n<p>Here is what determines your score in order of most-to-least impactful:<\/p>\n<ul>\n<li><strong>Payment history: 35% of your score.<\/strong> If you always pay your bills before the due date then you will nail this part of your credit score. Pay late or miss a payment and you\u2019ll ding your score. If you\u2019ve had a bankruptcy, foreclosure, or defaulted on a loan, your score will dip.<\/li>\n<li><strong>Amount of debt: 30% of your score.<\/strong> How much you currently owe counts for nearly one third of your score. But it\u2019s also based on your credit utilization ratio, which is how much of your available credit you\u2019re using. Someone who has $1,000 worth of debt on a credit card with a $2,000 limit has a higher credit utilization ratio (50%) than someone who has $1,000 worth of debt on a card with a $10,000 limit (or 10%).<\/li>\n<li><strong>Length of credit history: 15%.<\/strong> This category considers how long you\u2019ve had your credit accounts, including the age of your oldest account and the average age of all your accounts.<\/li>\n<li><strong>New credit: 10%.<\/strong> Lenders look at the number and type of new accounts and requests for credit you\u2019ve made. Applying for a lot of new credit cards in a short time period signals to a lender that you are in a financial tight spot and may be more risky to lend to. However, the algorithms they use do recognize when consumers are rate shopping for things like mortgages and student loans. If those inquiries fall within a two-week window, they\u2019ll only count as one hard pull on your credit.<\/li>\n<li><strong>Credit mix: 10%.<\/strong> Variety is the spice of life and credit scores. This part of the formula looks at the types of credit accounts you have. Ideally, you\u2019ll show a mix of loans that include revolving accounts (like credit cards), installment loans (auto loans) and retail accounts like store cards.<\/li>\n<\/ul>\n<h2>What\u2019s Not Used in Your Credit Score?<\/h2>\n<p>The credit reporting industry knows a lot about you. But there are certain things that are not included in your consumer credit file and therefore do not factor into your credit score, including:<\/p>\n<ul>\n<li><strong>Personal information:<\/strong> Such as your race, color, religion, national origin, sex and marital status. Also missing is your salary and employment history.<\/li>\n<li><strong>Interest rates:<\/strong> What you pay on credit cards and other loans is not included in your file. However, your balances, amounts due and any past due payments are included.<\/li>\n<li><strong>Old credit account\/credit information:<\/strong> Negative information eventually expires. Charged-off and collection accounts that are more than seven years old are not reported. Same with bankruptcies that are more than 10 years old. If you see those still listed on your credit reports, you can appeal them.<\/li>\n<li><strong>Certain credit inquiries:<\/strong> When you check up on your own credit, it\u2019s called a \u201csoft inquiry\u201d and there is no harm done to your credit score and it does not appear on your report. Same with inquiries from lenders who are reviewing your account to send you a pre-approved offer. \u201cHard inquiries\u201d are noted in your file. Those are made when you apply for credit and give an institution permission to check your creditworthiness.<\/li>\n<\/ul>\n<h2>How Can I Improve My Score?<\/h2>\n<p>It takes time and patience to build a solid credit history. A few rules of thumb to follow that can help you on the path to getting or maintaining a good credit score:<\/p>\n<ol>\n<li><strong>Establish credit if you have little to none. <\/strong>Some people may be surprised to find that they have little to no credit. Perhaps you\u2019ve been an authorized user on your partner\u2019s credit card, or you\u2019ve been the primary caretaker for your family and haven\u2019t applied for any independent accounts. Protect yourself and build credit if this is the case. There are credit cards designed for people with little to no credit.<\/li>\n<li><strong>Pay your bills on time every month.<\/strong> Since timeliness of payments has the biggest impact on your score (35%), staying on top of your due dates is paramount to keeping your score from getting dinged.<\/li>\n<li><strong>Don\u2019t close your oldest accounts.<\/strong> Having a long credit history can show lenders that you\u2019re able to pay your loans on time and that you\u2019re a good candidate to extend credit to. If your oldest card is one you rarely use, either keep it active by using it for the occasional small purchase or ask the issuer if you can do a product change to a card that\u2019s a better fit for your spending habits. That way, you\u2019ll still keep the age of your account and your lender won\u2019t stop reporting your good behavior.<\/li>\n<li><strong>Avoid opening too many new accounts at once.<\/strong> It can be tempting to apply for several credit cards within a short period of time to take advantage of lucrative sign-up offers. But too many inquiries can temporarily drag down your score. Plus, sign-up offers typically require minimum spending amounts which could mean spending more than you normally would just to get that welcome bonus.<\/li>\n<li><strong>Stay well under your spending limits.<\/strong> Bumping up against the credit limit on your cards can be a signal to lenders that you\u2019re spending beyond your means. Try to keep your credit utilization ratio at 30% or less for the optimal impact on your score. If applying for a mortgage or other large loan in the next several months, keep your spending to less than 10% of your available limit.<\/li>\n<li><strong>Check in on your credit report to make sure there are no inaccuracies. <\/strong>YYou can (and absolutely should!) see what the credit bureaus have on you. They legally have to share that information. Thankfully, you can now get your credit reports for free \u2014 you can pull your credit reports free each year from each of the bureaus by going to <a href=\"https:\/\/www.annualcreditreport.com\/index.action\" rel=\"noopener\">annualcreditreport.com<\/a>. Note: You can see your credit report for free, not your credit score, but that\u2019s okay. When you pull your credit report, you can see immediately if there are any errors that need to be corrected, and where you can improve.<\/li>\n<\/ol>\n<h2>Contact Sound Credit Union For Support<\/h2>\n<p>At <a href=\"https:\/\/www.soundcu.com\/\">Sound Credit Union<\/a>, we believe building strong credit starts with financial confidence. <a href=\"https:\/\/www.soundcu.com\/our-board\/\">Our team<\/a> is here to help you make sense of your credit score, navigate your credit report, and find tools that support your goals, whether that means applying for your first secured credit card, consolidating debt, or just understanding what\u2019s in your credit file.<\/p>\n<p>Need help getting started? <a href=\"https:\/\/www.soundcu.com\/contact\/\">Talk to a Sound Credit Union expert<\/a> about your options or explore our credit-building products today. We&#8217;re here to help you move forward, one payment at a time.<\/p>\n<\/div>\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\n\t<\/div>\n<\/div>\n\n\n<div class=\"co-flex_row co-flex_row__white co-flex_row__single-path-cta co-flex_row__next_row__blog-contributors\" >\n\t<div class=\"co-flex_row--row co-row\">\n\t\t\t<svg class=\"co-sp_cta__svg\" width=\"488.512\" height=\"338.101\" viewBox=\"0 0 488.512 338.101\">\n\t\t\t<path class=\"co-sp_cta__svg--path_big\" d=\"M488.512,163.324C337.738,308.387,172.875,346.284,6.386,332.445c-12.895-1.072-2.726.507,0-169.121C7.666,83.681-1.682,4.826,3.448,4.309,177.337-13.221,346.255,19.454,488.512,163.324Z\"\/>\n\t\t\t<path class=\"co-sp_cta__svg--path_small\" d=\"M408.431,63.648c-126.358,121.572-278.108,50-408.431,0C129.644,19.327,291.966-54.138,408.431,63.648Z\" transform=\"translate(0 207.52)\" fill=\"#efc025\"\/>\n\t<\/svg>\n\t<div class=\"co-sp_cta\">\n\t\t\t\t<header class=\"co-intro_text\">\n\t\t\t<h2 class=\"co-intro_text--title\">See what&#8217;s possible.<\/h2><div class=\"co-intro_text--intro\"><p>Get prequalified for a loan with no impact to your credit score.<\/p>\n<\/div>\t\t<\/header>\n\t<a class=\"co-sp_cta--button gtm-button\" href=\"https:\/\/pages.soundcu.com\/instant-prequal?_ga=2.176180965.192707024.1718034432-1124716528.1711565775&#038;_gl=1*swyl0d*_gcl_dc*R0NMLjE3MTc0MjY1MDguQ0lqWTE2Yll2NFlERlhBbi1RQWRENjR0Q0E.*_gcl_au*MTU4MTcxNzIwLjE3MTE1NjU3NzU.*_ga*MTEyNDcxNjUyOC4xNzExNTY1Nzc1*_ga_FR6440DWJ8*MTcxODA1NTUzMS4xNjcuMS4xNzE4MDU2NDUyLjU5LjAuMA..\" rel=\"noopener\">Get Started<\/a>\t<\/div>\n\n\t<\/div>\n<\/div>\n\n\n<div class=\"co-flex_row co-flex_row__last co-flex_row__blog-contributors\" >\n\t<div class=\"co-flex_row--row co-row\">\n\t\t\t<div class=\"co-blog_contributors\">\n\t\t\t\t\t<div class=\"co-blog_contributor\">\n\t\t\t\t<div class=\"co-blog_contributor--img_wrap\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"300\" src=\"https:\/\/www.soundcu.com\/files\/Sound-CU-May-20258643-Tammie-Atoigue_300x300.jpg\" class=\"co-blog_contributor--img\" alt=\"Tammie Atoigue VP Consumer Lending\" srcset=\"https:\/\/www.soundcu.com\/files\/Sound-CU-May-20258643-Tammie-Atoigue_300x300.jpg 300w, https:\/\/www.soundcu.com\/files\/Sound-CU-May-20258643-Tammie-Atoigue_300x300-150x150.jpg 150w, https:\/\/www.soundcu.com\/files\/Sound-CU-May-20258643-Tammie-Atoigue_300x300-75x75.jpg 75w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/div>\t\t\t\t<div class=\"co-blog_contributor--content\">\n\t\t\t\t\t<h3 class=\"co-blog_contributor--name\">Tammie Atoigue<\/h3><div class=\"co-blog_contributor--title\">Vice President of Consumer Lending<\/div><div class=\"co-blog_contributor--bio text-component\"><p><strong>Tammie Atoigue<\/strong> is the Vice President of Consumer Lending at Sound Credit Union, where she utilizes her extensive experience to empower members in achieving their financial goals. She is passionate about member education, particularly around credit and smart borrowing, and frequently participates in industry speaking engagements to share her insights.<\/p>\n<\/div>\t\t\t\t\t\t<div class=\"co-blog_contributor--social\">\n\t\t\t\t\t\t\t<span>Connect<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.linkedin.com\/in\/tammie-umawatari-atoigue-40463b61\/\" class=\"co-social_share--link\" target=\"_blank\" rel=\"noopener noreferrer\" aria-label=\"LinkedIn\">\n\t\t\t\t\t\t\t\t\t<svg class=\"icon-svg\" viewBox=\"0 0 24 24\" role=\"img\" aria-label=\"Icon LinkedIn\">\n\t\t\t\t\t\t\t\t\t\t<use xlink:href=\"https:\/\/www.soundcu.com\/wp-content\/themes\/soundcu-theme\/images\/sprite-icons.svg#linkedin\" \/>\n\t\t\t\t\t\t\t\t\t<\/svg>\n\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\t<\/div>\n\n\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The better your credit score, the better the rates you\u2019ll qualify for with mortgages, auto loans, credit cards, and other types of loans. <a href=\"https:\/\/www.soundcu.com\/blog\/know-your-credit-score-what-good-credit-vs-bad-credit-really-means\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":10,"featured_media":11048,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_searchwp_excluded":"","footnotes":""},"categories":[50],"tags":[110,62,162],"class_list":["post-11700","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-life-finances","tag-budgeting","tag-credit","tag-financial-education"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/11700","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/comments?post=11700"}],"version-history":[{"count":14,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/11700\/revisions"}],"predecessor-version":[{"id":17142,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/11700\/revisions\/17142"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media\/11048"}],"wp:attachment":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media?parent=11700"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/categories?post=11700"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/tags?post=11700"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}