Good Credit Score V/s Bad Credit Score
Credit Education Good credit score bad credit score

Good Credit Score V/s Bad Credit Score

Moumita Basu

It always helps to know what is a good credit score and a bad credit score, and how having a good credit score helps. The commonly used credit score range is 300-850, where a credit score lying between 670 and 739 is considered good, and a score above 800 is considered exceptional. While credit scores between 580 and 669 are considered fair, any credit score lower than 580 is considered a poor credit score. Even if you are in the fair range, you should be looking up ways to build bad credit to good credit.

Banks use your credit score to determine your “creditworthiness”. Going by your credit score, lenders get to know about your payment history. Depending on that, they can discern the likelihood of you repaying borrowed credit, such as loans.

If you have a good credit score, you can qualify for loans and get approvals for mortgages. In simpler terms, a high credit score helps in getting approvals for various credit options. More so, you can enjoy low-interest rates and relatively higher credit limits among other rewards. Thus, it is all-the-more important to be well aware of what is the difference between good credit and bad credit scores.

What is a Good and Bad Credit Score?

It always helps to know what is good credit and bad credit and how having a good credit score helps. Even so, before moving on to learning about good vs bad credit, we will learn about the various ranges of credit scores and their implication on an individual’s creditworthiness.

Credit Score


What it means



You have a good credit history. Because you are a low risk to lenders, you can avail best rates and terms on credit cards and loans.


Very Good

You pay your dues and bills on time. Going by your responsible repayment behavior, lenders will forward credit to you at favorable terms.



You have a good repayment history. Though you may get credit, you will not get the best interest rates.



You may have paid your loans and credit card dues late. Although lenders may lend to you, you may have to pay down payments and higher interest rates. 


Very Poor

You may have defaulted on credit card bills or payments or EMIs. Lenders will not approve your loan and credit card applications.

Good Credit - When you’re learning about good credit and bad credit, you must note that a score between 630 and 739 is deemed to be a good credit score. This range oscillates around the average US consumer score. With a good credit score, you can avail of loan approvals and economical interest rates.

Bad Credit - The more you learn about good vs bad credit scores, you will be able to discern that a credit score below 580 is considered to be a bad credit score. This score is much below the average US consumer score. A low credit score means that lenders will not lend to you easily. They will perceive you as a risky borrower for loans and other lines of credit.

READ MORE: What is a low credit score?

Your credit score affects your life in different ways and areas. This includes your plans to borrow credit or loans for vehicles, education, and home, among others. As your knowledge about good credit and bad credit grows, you will know how a good credit score helps you to get loan approvals at good terms. On the other hand, people with low credit scores do not enjoy such benefits.

How do you lose out when you have a low credit score?

The more you study about good credit and bad credit, you get to learn how people with a low credit score may not qualify for loans and big-ticket purchases. Moreover, securing lines of credit can not only become difficult but also come at expensive interest rates.

Besides your credit applications getting denied, bad credit leads to loss of opportunities and hard cash too. That’s because you end up paying more in monthly payments, security deposits, and high-interest rates.

You also may find it tough to rent a home. Either you may not get approvals or you might have to make a down payment for registering with a utility company.

MUST READ: Best way to build up bad credit

How do you gain a high credit score?

When you start learning about good vs bad credit scores, you will even know that a good credit score helps in various ways. For starters, you will enjoy loan approvals at better interest terms.

If you demonstrate responsible credit behavior in the past, you will have a high credit score. As a result, potential lenders will perceive you to be good at managing debt and become confident in extending credit to you.

In addition to financial lenders, cell phone companies, management companies, and utility companies check your credit score to assess whether you meet the given terms before accepting your applications.

Even banks and other lending institutions use your credit score to decide whether or not they will approve your requests for loans and other credit.

In all, with a high credit score, you can enjoy quicker loan approvals, better repayment terms, and low-interest rates.

Conversely, individuals with a bad credit score do not have these benefits.

For instance, consider two individuals - A and B. Both A and B have credit usage and loans to pay off. However, there lies major differences in their financial spending behavior.

A is someone who pays the monthly payments on the due date and is consistently paying off her debts. This consistent payment over time has reduced both the principal and interest amount. A systematically keeps a track of the due amount that she has to pay on the “due date” and keeps aside the amount to ensure no default payment. This financial discipline gets reflected on her account and the same is reported to the credit bureaus as well.

B on the other hand has missed on several monthly payments. In addition to that, B also has a home loan which is long due and there is a significant accumulation of the interest payable. It is highly like that A will have a credit score that is “good or very good” and lies somewhere in the range of 670 to 899, whereas B’s credit score will reflect her bad financial planning and it may be somewhere between 300-579. A score range of 300-579 will make it very difficult for person B to get further credit. Chances are high that even the currently available credit will come to her at an exorbitant interest rate.

Given below is a table to help you identify the difference between good credit and bad credit with ease -


Good Credit

Bad Credit



Below 580

Credit Limit

High and extended

Relatively lower

Interest rate

Low interest rate

High interest rate

Annual fees

Low annual fees

High annual fees

Access to Credit Card

Easily available

Difficult to get unsecured credit cards


Easy loans and line of credits

Bad credit restricts availability of credit


We have discussed both the difference between good credit and bad credit and how your credit score determines your eligibility for loans and credit cards. Besides learning about good vs bad credit scores, it may help to know how credit cards work. Remember that how you use your credit cards determines whether you have good credit or bad credit. The general recommendation is to use your cards responsibly, for it goes a long way in improving your overall credit profile. To build your credit score quickly, and with minimal fuss, check out Zolve Azpire Credit Builder Card.

Frequently Asked Questions

Is it possible to have no credit score?

Not everybody has a credit score. Only people who have a credit history have a credit score. And only individuals who have taken loans and credit cards have a credit history. That means if you have never taken a credit card or a loan, you will not have a credit history and subsequently, no credit score.

Why do different credit bureaus generate different credit scores?

Equifax, Experian, and TransUnion are the three FCRA (Fair Crediting Report Act) certified credit bureaus. Each credit scoring agency applies different scoring models to generate credit scores. Therefore, your credit score varies as per the credit bureau that calculates your credit score.

Which are the factors that most affect your credit score?

Algorithms are used to calculate credit scores. They consider various factors to generate credit scores. The different factors and their weightage are seen below:

  • Payment History (35%): Making on-time payments improves your score whereas payment defaults can lower it
  • Credit Utilization Rate (30%): Keep your credit utilization rate around the 30% mark, which is considered ideal
  • Length of Credit History (15%): Old credit cards and credit accounts indicate you manage credit responsibly
  • New Credit Inquiries (10%): Umpteen credit applications during a short duration can lower your credit score
  • Credit mix (10%): Try to keep a healthy mix of both secured loans and unsecured loans

What is the problem with a bad credit score?

A bad credit score adversely affects your access to credit and loan facilities. Even if you manage to get a credit or a loan, it will come with a high-interest rate. Thus you will have to pay a relatively much higher repayment rate. Furthermore, it can also have a negative impact on terms of employment. Even getting a driving license can also be negatively affected due to a bad credit score.

How do I change my bad credit score into a good credit score?

There is no fixed formula and time bandwidth following which you can change your bad credit score into a good one. However, you can rest assured that if you make your payments regularly and pay off any debts that you have, over time, you can build a sustainably good credit score.