When Good Credit Goes Bad Part 1
written by Credit-HQ ExpertSometimes as you go about your daily business, you might wonder the state of your credit. If you can use a credit card and things seem to work, you assume your credit is good. But if your credit has “gone bad”, its possible you might not know that it passed into that classification. So its good to know what bad credit is so you know when your good credit goes bad.
Obviously “bad credit” is not a value judgment. It refers to your status in regards to your credit report and your credit score. But there is no clear demarcation between bad and good credit just based on whether there is anything bad or good is on the report. Just because there may be a few negative entries, that doesn’t make your credit “bad” any more than good comments on your report make you a good credit manager. You have to look more closely at your credit before we draw those kinds of conclusions.
Your Credit Score: Who You Are at the Credit Bureau
We should not feel that it is not personal that in terms of your credit status as it is represented by your credit score, you are essentially a number which is your credit score and financial numbers from various credit and even insurance resources. But the numbers that define us as a credit entity are what make things like getting credit offers from credit card companies and how we are treated by different financial entities we have to do business with.
Your credit score can make the difference between whether you are considered a desirable customer by a bank or a department store or a bad credit risk. It can make things easy or difficult when setting up an account with an insurance or utility company, when renting a car or an apartment or even when you are applying for a job.
There is no reason to take it personally how you are treated by credit, insurance or other businesses. That credit score will set the tone for the way you are treated and to what extent you are considered a risk or a good prospective customer by businesses you interact with.
It’s good to clear up the mystery about what the difference is between a good or a bad credit report. It is similar to the grading system in college. We all shoot for the 4.0 when we go through our school years. But 4.0 is not the only good score. Even a 3.0 is a good score that can get you into your next level of schooling. So if you have a 3.2 or a 3.6, it would be wrong to call them a bad score. That is a similar scoring system as the credit score system. So it’s an apt comparison.
The same can be said for “bad credit”. While a credit score that is not strong is generally not preferred, there really is not clear cut line of demarcation about what makes up a good or bad score. If you looked at 50 people with “bad” scores, we would find that some of them do just fine in their relationship with credit and insurance agencies and others do poorly and there is not direct connection between the nuances of the credit score numbering system. And it is a ray of light for those with “bad credit” because you can still function in the financial world even if your score needs work.
Click here to see Part 2: When Good Credit Goes Bad Part 2
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