When someone says "bad credit," they usually mean a number, but the threshold depends on which model and which lender you ask. The honest answer: bad credit means anything that triggers higher interest rates, larger deposits, or outright denials when you apply for a loan, an apartment, or a credit card. Here is what the major scoring models say, what bad credit actually costs in real dollars, and the fastest way out.
The Official Cutoffs
FICO Score Ranges
For a deeper look at the full credit score ranges:
- Exceptional: 800-850
- Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor (bad credit): 300-579
VantageScore 4.0 Ranges
- Superprime: 781-850
- Prime: 661-780
- Near prime: 601-660
- Subprime (bad credit): 300-600
FICO calls a 580 the start of "fair." VantageScore calls everything under 601 "subprime." In real-world lending, scores between 580 and 660 are functionally treated as bad credit by most prime lenders, even when the model labels them "fair" or "near prime."
What Bad Credit Actually Costs
The gap between bad and good credit is dollars, not just labels. Some examples using current 2026 averages:
- Auto loan, $30,000, 60 months: A 720 borrower gets ~7% APR and pays roughly $5,650 in interest. A 580 borrower may face 18% to 22% APR and pay $13,000 to $18,000 in interest, or be denied without a co-signer.
- 30-year mortgage, $300,000: A 740 borrower at 6.5% pays $1,896/month. A 620 borrower at 8.0% pays $2,201/month. The difference is $109,800 over the life of the loan.
- Credit card APR: Prime borrowers see APRs from 17% to 25%. Subprime borrowers see 28% to 36% on cards that approve them.
- Apartment rentals: Many large property management companies require 620 or higher. Below that, expect a larger security deposit, a co-signer, or denial.
- Auto insurance: In most states (excluding California, Hawaii, Massachusetts, Michigan, and Washington), insurers use a credit-based score to set rates. Subprime credit can add 50% to 100% to your premium.
The phrase "bad credit costs money every month" is literally true.
What Causes a Bad Credit Score
A few specific events drive most subprime files:
- One or more 30+ day late payments. A single late payment can drop a 720 score to the high 500s.
- A collection account. Even a small medical or utility bill turning into a collection can cost 50 to 130 points.
- High credit utilization. Maxed-out cards alone can pull a score under 600 even with on-time payments.
- Bankruptcy. A Chapter 7 takes 7-10 years to roll off, although score recovery can begin within 18-24 months.
- Charge-offs and repossessions. These are the most damaging items short of a bankruptcy.
- Thin file. Some people with no negative items still have a low score because they only have one or two accounts and not enough history.
Thin-file bad credit is the easiest to fix. Negative-item bad credit takes longer but is still very fixable.
Step One: Pull Your Reports
Go to AnnualCreditReport.com and pull all three reports for free. They are now updated weekly under federal law. Look for:
- Late payments (anything 30 days or more past due)
- Collections (paid or unpaid)
- Charge-offs
- High utilization on any open account
- Accounts you do not recognize (could be identity theft)
- Errors (wrong account, wrong balance, wrong status)
Dispute any errors directly with the bureau. They have 30 days to investigate and remove or correct anything they cannot verify.
Step Two: Knock Down the High-Impact Items
Pay down credit cards aggressively
Utilization is 30% of your FICO score and one of the fastest factors to move. Getting all your cards under 30% can lift a score 20 to 40 points. Getting them under 10% can lift another 10 to 30. This change shows on your next statement, not next year.
Settle or pay off collections
Under VantageScore 4.0 and FICO 9/10, paid collections do not hurt your score. If you have collections, either dispute them (if they are wrong), pay them off, or negotiate a pay-for-delete in writing.
Services like Dovly, Lexington Law, and Credit Saint will handle the dispute and negotiation paperwork for you if you do not want to do it yourself.
Fix any past-due account
Get current on every open account. After 12 months of on-time payments post-late, the score impact of an old late payment fades dramatically.
Step Three: Add Positive History
If you have bad credit because of negative items, you also need positive trade lines reporting to all three bureaus to prove the new pattern. Two products do this well:
- Secured / builder credit cards: the Self Visa® Credit Card, OpenSky, and Current Build Card are designed for subprime files and report to all three bureaus.
- Credit-builder loans: the Self.Inc Credit Builder Account and Cheers Credit Builder Loan add installment history with no upfront credit check.
Use a credit card and a builder loan together. The combination of revolving and installment credit hits the credit-mix factor at the same time as payment history.
Step Four: Be Patient (Six Months Is the Magic Window)
Most people with bad credit who follow this plan move from subprime to fair in 4 to 8 months and from fair to good in another 6 to 12. Watch your progress weekly with Creditship so you can see which moves actually moved the score.
Frequently Asked Questions
Is a 600 credit score considered bad?
It is borderline. FICO calls 580-669 "fair," but VantageScore calls anything under 601 subprime. Most prime lenders treat 600 as bad credit. Below 580, every model agrees it is bad credit.
Can I get a loan with bad credit?
Yes, but you will pay much higher rates. Personal loans are available through marketplaces like MoneyLion and EzLoan for subprime borrowers, although APRs may approach 36%. Builder loans are usually a better long-term move.
How long does it take to fix bad credit?
Most people see 50 to 100 point gains within 6 months of consistent on-time payments and lower utilization. Reaching 700+ from a 550 starting point typically takes 12 to 24 months with disciplined effort.
Will paying off all my credit cards immediately raise my score?
It usually raises your score within one billing cycle. The catch: closing the cards after paying them off can hurt your score. Pay them off, leave them open, and use them for small monthly purchases that you pay in full.
