Bad Credit

Loading the player...

What is a 'Bad Credit'

A bad credit is a qualification of an individual's credit history that indicates that a borrower carries a higher credit risk. A low credit score indicates bad credit, while a high credit score is an indicator of good credit. Creditors who have lent money to an individual with bad credit face a higher risk of that individual missing payments or defaulting.

BREAKING DOWN 'Bad Credit'

An individual's credit history is dependent on a number of factors, including the amount borrowed, the amount of available credit remaining and the timeliness of payments. An individual may have bad credit if he or she does not make timely payments or has defaulted on a loan during a period of time. Having bad credit makes it more difficult or costly to obtain loans, such as mortgages, from financial institutions.

RELATED TERMS
  1. Credit Utilization Ratio

    An input used in determining a person's credit score. It is the ...
  2. Available Credit

    The unused portion of an open line of credit, such as a credit ...
  3. Trade Credit

    An agreement where a customer can purchase goods on account (without ...
  4. Trade Line

    Credit account records that are provided to credit reporting ...
  5. Credit Limit

    The amount of credit that a financial institution extends to ...
  6. Credit Exposure

    The total amount of credit extended to a borrower by a lender. ...
Related Articles
  1. Investing

    Millennials: Prevent a Bad Credit Score

    Here are five ways to help prevent getting a bad credit score that could affect future loan, credit card or mortgage approvals.
  2. Investing

    5 Ways Bad Credit Screws Up Your Life

    When your credit score slumps, many other things in your life can also start to slide downward. How to recognize the situation and start dealing with it.
  3. Personal Finance

    The 5 Biggest Factors That Affect Your Credit

    With possible scores ranging from 300 to 850, credit scores reveal someone’s history for paying bills and being responsible.
  4. Personal Finance

    9 Ways To Improve Your Credit Score Today

    When it comes to finances, there are a number of goals that you might have established, such as saving money, paying down debt or new investments.
  5. Personal Finance

    What Credit Score Should You Have?

    We break down credit scores by age to see what your score should be and how it will affect your major purchases.
  6. Personal Finance

    How Bad Is My Credit Score?

    You've seen the number, but what does it mean? Here's how to assess your credit score and get to a better place if needed.
  7. Retirement

    6 Methods to Maintain a Healthy Credit Score During Retirement

    Learn how to improve your credit score during retirement. Your credit score still matters in retirement, and these tips can give it a boost.
  8. Managing Wealth

    How to Raise Your Credit Score Quickly

    Here are the best tips for raising your credit score quickly.
  9. Managing Wealth

    Can You Hit A Perfect Credit Score?

    Everyone wants a great credit score, but few know exactly how to achieve perfection. Find out how your credit score is kept and what it takes to reach a perfect 850 rating.
  10. Personal Finance

    Use Your Credit Card To Boost Your Credit Score

    Misusing credit cards can blow your credit – but using them well can boost your score. How to grow a history, fix bad credit, make good credit even better.
RELATED FAQS
  1. Is it possible to have a credit limit that's too high?

    Avoid these pitfalls when working with high credit limits, and learn how to increase your credit score by increasing your ... Read Answer >>
  2. How does the number of credit card accounts I have affect my credit score?

    Your credit score, which is also referred to as your FICO score, is a measure that creditors use to assess your potential ... Read Answer >>
  3. What are some good alternatives to taking out a line of credit?

    Read more about how opening a line of credit might not be the best answer for you and determine available alternatives if ... Read Answer >>
  4. What are the best ways to rebuild my credit score quickly?

    Repair your credit score more quickly by talking to your lender, increasing the credit limit on your existing credit cards ... Read Answer >>
  5. Can a Walmart credit card help you build credit? (WMT)

    Learn how Walmart credit cards affect your credit score, and get five tips for improving your credit with a Walmart credit ... Read Answer >>
  6. What's more important to lenders, my credit score or my credit report?

    Find out why lenders care more about your credit report than your credit score and why you should care more about your credit ... Read Answer >>
Trading Center