What are the Causes of a Bad Credit Score?
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What are the Causes of a Bad Credit Score?

Moumita Basu

A bad credit score means getting credit can be tough for you. Potential lenders may shy away from lending to you because they reckon you are a risky borrower. Having said that, you may face a lot of difficulty in getting loan approvals and credit cards. Now, if you’re trying to get a high credit score, you should first know the things that can hurt your credit score. If you do not know what causes a bad credit score and how it is calculated, then you won't be aware of what you should avoid, following which you may end up indulging in financial behaviors that can become reasons for bad credit rating.

What is a Bad Credit Score Range?

While there are several credit-scoring companies, and they follow various credit rating systems, FICO and VantageScore are the most popular among the given lot. They both adhere to the 300-850 range. However, they both have their own models to determine credit scores. Also, they both differ when it comes to defining bad credit. That’s because VantageScore has 2 bad credit categories: Poor and Very Poor. And, this is not the case with FICO.

Even so, when it comes to things that hurt your credit score, they are more or less the same for both FICO and VantageScore. Here we have listed the credit score range for FICO and VantageScore.

FICO: Credit Scores


800 or above

Very Good

740 to 799


670 to 739


580 to 669


lower than 580

BONUS READ: What is a Bad Credit Score?

Bad Credit Score: What are the Causes?

Here are the causes of a low credit score:

  1. Making late payments - A large chunk of your credit score (almost up to 35%) is based on your payment history. Paying your bills late is one of the things that will hurt your credit score
  2. Defaulting on your loan and credit card payments - Not paying your credit card and loan EMIs is also among the causes of low credit scores. Remember the more you default paying your monthly credit card bills, the faster your account will be charged off
  3. Having your account charged off - In cases where your creditor perceives that you will not honor your payment, they will charge off your account. By charging off your account, your creditor is implying that he has given up on you. Going forward, other lenders will also be wary of lending to you and they may reject your loan applications
  4. Getting sent to collections - Lenders may send your account to collections when they have given up trying to get payments from you. Now, a collection status on your credit report indicates that the creditor tried to get payments from you but could not do so. Again, this is one of the things that hurt your credit score and not a place where you want to be
  5. ​Filing for bankruptcy - Among things that will hurt your credit score are bankruptcy filings. People file for bankruptcy as a last option. Surely, bankruptcy is an extreme step and negatively impacts your credit score. To add to your woes, bankruptcy remains on your credit report for 7 years
  6. Exercising the foreclosure option - You may lead your creditor to foreclose your loan if you fall behind in your mortgage payments, which could be one of the reasons for a low credit score
  7. Passing a judgment - Among some more causes of low credit score is a judgment on your credit report. A judgment conveys that the court had to intervene to make you pay the debt. Also, judgments can be of 2 kinds: paid judgment and unpaid judgment. A paid judgment reflects a better picture than an unpaid judgment

ALSO READ: What are the effects of poor credit?

After studying the things that hurt your credit score, you may need tips on how to improve your credit score. Let’s go!

How Can You Improve Your Credit Scores?

Now that you know what are the causes of a bad credit score, let’s move on to the different ways of improving your credit score.

  • As your initial step, check your credit score. That’s how you can know where you stand and where to start from
  • Once you receive your credit report, check for any errors to know what gives you a bad credit rating. If you find that your credit report carries incorrect or inaccurate information, take it up with the credit bureaus
  • Paying on-time payments is the most important step for achieving a good credit score. Do not forget your payment history makes up for a large percentage of your credit report
  • One of the reasons for poor credit scores is a high credit utilization rate. Make efforts to bring down your credit utilization ratio to 30%, which is deemed to be the ideal rate. You can do so by paying off your revolving debt, which includes your credit card payments
  • Take the help of a family member and become an authorized user of their credit card. Get a trusted partner if you’re taking this option since the account owner has to pay the bills. Avoid defaulting on such payments because it can be one of the things that can hurt your credit score
  • After studying about the causes of a bad credit score, your financial planner may suggest taking a secured credit card. If you take a secured credit card, you have to deposit money into an account. Your deposit works as collateral for a credit card and determines your credit limit. Secured cards report your payment history to the main credit reporting companies – TransUnion, Equifax, and Experian. Check with your card issuer about the same before signing up with them. By maintaining a positive payment history, you can build credit and increase your credit score.
  • The Experian Boost™† is a free program whereby you can improve your FICO score. Because one of the reasons for low credit score is late payments, you can benefit from this program by making payments on time. Through this program, you can add positive information about the payment of your monthly telecom bills and utility bills to your credit report. This helps by boosting your credit scores

MUST READ: Good V/s Bad Credit Score


We have studied the various causes of a bad credit score. Additionally, we have shared some tips on how to improve your credit score. By doing the needful, you can boost your credit scores and increase your credit options. So, take time out to find out why your credit scores are falling and take corrective measures. This way, you can enjoy a host of credit options at good repayment terms.

If you are dealing with low credit scores, then check out Zolve Azpire Credit Builder Card to build your credit score quickly and with minimal effort. You must still meet the requirements, however, your credit history will not be taken into account. To help you build credit, you can easily apply for an Azpire credit card with no recurring fees and a 0% annual interest rate.

Frequently Asked Questions

What are the differences between credit score and credit report?

Your credit report contains your full history of credit dealings and payments, whereas, your credit score comprises only part of your credit report.

Your credit history also mentions what is the current status of each of your credit accounts – whether they are active, settled, closed, or delinquent. These details and other information are used to generate your credit score.

How much time does it take for credit scores to change?

Your credit score keeps varying as per the changes in your credit report. That means your credit score changes as and when new credit information is added, edited, or deleted from your credit report. These changes include adding or closing loan accounts and credit cards. By and large, banks and other financial organizations report your information to credit bureaus once per month.

Would having multiple credit cards affect my credit score?

If you have many credit cards, it will not affect your credit score. Nonetheless, if you default on your credit card payments, your credit score goes down. Lenders may then deny credit to you because they will perceive you as a risky borrower. It may help to know that hefty credit card dues can lead to credit defaults. So, try to bring down your debt.

Can a bankrupt person get a credit card?

A person who has declared bankruptcy will find it very difficult to get a credit card. Such a person will have to rebuild their credit score and only after there is some positive scope of repayment does he/she can get a credit card. It should be noted that the chances are high that there will be stringent conditions and high-interest rates.

How is a good score of FICO different from Vantage?

Both FICO and Vantage have a score range of 300-850. The difference lies in the breakdown of the ranges between the two. Any credit score higher than 670 is considered good in FICO, whereas for Vantage a good score is one that is higher than 700.