Home > Credit Score > 7 Signs You Have Bad Credit

Comments 0 Comments
Advertiser Disclosure


Maybe you’re busy. Maybe you’re afraid of what you’ll see. Whatever the case, it can be all too easy to turn a blind eye to your credit report. Fortunately (or, perhaps, unfortunately), certain red flags can let you know that something is really amiss — and that your credit score has entered the danger zone. (Bad credit scores are generally considered scores below 600 on the common 300 to 850 scale.)

Here are a few ways to know you may have bad credit beyond looking directly at those three important digits.

1. A Loan Application Gets Denied

A loan denial is one of the quickest ways to learn that your credit is in rough shape, since a good credit score generally entitles you to affordable financing and an average one will often net you credit, but at a higher interest rate.

Fortunately, you should get an idea of where your credit stands shortly after you get turned down for a loan (though it’s a good idea to pull your credit immediately anyway). The Fair Credit Reporting Act (FCRA) requires lenders provide a copy of the report they used, along with an explanation, when a consumer is denied or offered adverse terms on a contract or loan.

2. Your Credit Card Issuer Won’t Lower Your APR (or Raise Your Limit)

A credit card issuer typically reviews your credit if you ask for a lower annual percentage rate or a credit limit raise on an existing account. So, if “you get turned down for some reason, it’s probably a sign that there’s something on your credit report that they have seen … that gives them a little discomfort,” said Bruce McClary, vice president of public relations and external affairs at the National Foundation for Credit Counseling.

3. Your Issuer Closes Your Credit Card

Issuers, too, are in the habit of conducting account reviews on their own from time to time, so, if you see a change in your credit card’s terms and conditions (like, say, your credit limit decreases), your score may have gone down. And if it’s fallen low enough, “they could close your account, particularly if it’s got a zero balance,” said Barry Paperno, a credit expert who blogs at Speaking of Credit.

4. You Get a Default Notice or Subpeona From a Creditor

Late payments are certainly going to hurt your score, but, by the time you’ve entered default, big damage is likely to have been done. The same rule applies if you’re being or were sued for an old debt.

“By the time you get a judgment you’ve probably entered default,” Paperno said. “You’ve probably gone to collections. Those are as bad as you can get.”

5. You’re Contacted By a Debt Collector

Lots of different items, including medical bills, unpaid utility balances or even gym subscriptions can wind up in collections. And these collections accounts will hurt your credit score, if the company who owns them reports to the three major credit reporting agencies. So, if bills start arriving in the mail or a debt collector comes calling, that’s your cue to check your credit, McClary said.

“You want to make sure the collections notice is valid,” he said, since sometimes scammers call or collectors have the wrong number. “One step in doing that is looking at your credit report.”

6. You Start Receiving Subprime Credit Offers

Credit card solicitations can wind up in anybody’s mailbox, but pre-approved offers from subprime financing providers, like a secured credit card issuer, payday lender or a car title loan company, may be a sign your score has dropped below a certain threshold — “especially if you’re somebody who’s used to being qualified for prime credit,” McClary said.

7. You Have to Put a Deposit Down on a Utility Account

Lenders aren’t the only ones who pull your credit — cellphone providers, insurers and even utility companies look at versions of your scores when determining whether to do business with you. So, if you have to pay fees or are offered less-than-stellar rates, your credit may to blame.

When it comes to utilities, “If they check your credit and require a deposit, your credit is probably bad,” Paperno said.

Has There Been a Mistake?

Keep in mind, your credit can be bad for a variety of reasons. While you may have committed a faux pas you weren’t aware of, there’s also a chance an error is weighing down your score (you can learn more on Credit.com about how credit report errors happen.) And something more nefarious could be afoot — a sudden drop in your score is a sign identity theft could be occurring.

To get a handle of what might be behind your bad credit, you should throughly check your credit. You can do so by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com. If your bad score is valid, you can work to improve it by getting accounts out of default, paying down high credit card balances and limiting new credit inquiries.

More on Credit Reports & Credit Scores:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team