What is a bad credit score?

The word credit has become synonymous with something bad and negative for your finances, but it doesn’t have to be that way.

There are what we call, in simplified form, “good credit” and “bad credit”. But how to recognize them? We would like to reinforce that our objective is not, at all, to encourage the indiscriminate contracting of credit, but to educate about in which situations raising financing can be something positive for your life.

As a rule, a score is considered bad when the score is below 300 points. In this range, the customer is assessed as having a high risk of default. For this reason, it will be more difficult for him to get financing or a loan with lower interest, or even a good credit card.

From 300 to 700 points, on the other hand, we are already in the median range of the score. Here, the client is assessed as medium risk. In this way, it may be easier to have access to financial services with more beneficial conditions and more attractive interest rates, for example — but it is still possible to improve!

Finally, in the range above 700 points, the score is considered good and the risk of consumer default is already evaluated as small. Thus, it is very likely that this customer profile will not find it difficult to obtain financing, a loan or that credit card with numerous advantages.

The concept of credit is quite complex and difficult to understand, but when used sparingly and conscientiously, raising credit can even help you grow your wealth.

When you raise debt to pay for your college, through student credit, this is an example of positive credit, as studying will open doors to a better placement in the job market. With this, you will eventually be able to receive a better salary, which contributed to your cash generation.

Buying a dress with your credit card just to go to a party certainly qualifies your credit as bad. Just walk out of the store and put on the clothes, and the price drops by about half! Overkill? Of course not, if you want to sell this outfit, your alternative will be a thrift store, which will pay a much lower price for the outfit than what you paid at the store.

You need money and resort to overdraft or credit card: the interest rate in these cases are very high. Chances are high that you won’t be able to pay, snowball and get your name dirty. See here if the personal loan is a good alternative when you are paying high interest

Credit is good when you:

You have overdraft and credit card debts and you want to consolidate them: you are paying high interest rates and you have a chance to get cheaper personal credit and save money.

You will pay off debts with high interest to get out of the red: exchanging high interest for lower interest is the starting point to organize your financial life. However, it is always good to be aware of the care when taking out a personal loan to make the best choice among the available options