A credit score informs a lender about the potential risk involved in extending credit to a person. This in turn allows them to determine whether the person qualifies for a loan, and in case of lower scores, helps them to negotiate higher rates of interest on the loan being granted. So having a high credit score is very important to both the borrower and the lender. Scores normally range from a low of 300 to a high of 850 with the average score being about 720. Scores keep varying depend on the credit history of the person and is indicative of the possibility of a person going beyond 90 days on dues in the 24 month subsequent to the score. A credit score below 600 is considered risky and such persons will have to contend with higher interest rates and also find it difficult to become eligible for loans or credit.
A bad credit score can affect almost all part of a persons life. Such scores can even come about if you consistently pay only the minimum amount due on your credit card or are persistently late in the payment of utility bills. Even if the payments you have made do not reflect correctly in the records of credit bureaus, it can result in a credit score below 600.
It is very essential therefore, that you take immediate action to repair your credit score the very minute it touches the 600 mark, and make a concerted attempt to keep it to about 750. You can do this by arranging to settle all your debts and reducing the use of your credit card so that there is no additional debt. Make sure that you never use more than 25 of the available credit limit as this action itself can improve the credit score dramatically if the trend is seen as constant. If there has been misreporting of your debts or repayments make sure that you contact the credit bureaus and get this corrected. Quite often the lethargy in taking this action can create a bad credit score.