what is bad credit

What is Bad Credit – And What Can You Do About It?

Do you have a bad credit score but don’t know exactly what it means?

First of all you need to know the score  –  literally!

Wherever you are in the world there will be an number of organisations that provide you with a credit score (see here)

Whilst they all seem to pump out different numbers, the big red or green indicator lets us know very clearly if we are playing the game properly  – or not!

Don’t fret

Even a bad score can be turned around – don’t let it freak you out too much, it really is just a number at the end of the day and not something you should lose any sleep over.

If you have a bad credit score and its having a negative impact on your life then there are things that you can do to improve this, just put a plan in place, stick to it and watch your score rise.

I realise that this is an easy thing to say and much harder to do – especially if you have mounting debts and little or no income.

I know this feeling and it sucks

But things will not always be this way and if you can keep your head above water and limit the damage that this current situation is having on you and your finances, then that is FAR better than letting it beat you now and coming out the other side in a really bad way.

Some positive action is better than nothing – again I am speaking from experience.

If you need help – ask!

If you can get financial support – take it, there is no shame in it.

Just so long as you keep yourself legal and don’t borrow money you can’t pay back or at a cripplingly high interest rate that really isn’t going to help you at all in the long term.

My suggested action plan would be:

  1. Check your score
  2. Take a look at our 7 steps to debt freedom article or download our 10 page guide – these will give you some things to try that will improve your score without you necessarly paying money off any of the balances.
  3. Download a copy of the free debt planner so you can work out exactly where you start.
  4. Lookup local charities and debt help organisations
  5. Be good to yourself, you won’t get out of this if you blame yourself for getting to this place so get your head on straight before you do ANYTHING (checkout our mindset article – it might help)

Credit Scores in the USA

According to creditcards.com, the average FICO score rose to 711 in July 2020 from 706 in July 2019.  In fact, since the Great Recession circa 2008, average credit scores have been steadily rising! 

Increased access to credit information and credit information materials could be the cause of this promising trend, according to FICO.

Now for the not so great news: it’s possible we haven’t seen the entire aftermath of the COVID 19 pandemic to credit scores just yet.  In a recent blog post Ethan Dornhelm, VP of FICO Scores and Predictive Analytics, stated that federal stimulus payments and other relief efforts may help consumers in the short term, but the true “financial strain” could take months to appear on credit reports. 

Dornhelm reminds us that, in the Great Recession, credit scores didn’t hit rock bottom until late 2009, about a year after the economic decline began. 

The worst could be yet to come.

So how do most credit scores fare? 

Interestingly enough, right now about 20% of Americans have Excellent credit scores (800-850).  However, 16% have FICO scores between 300-579, which is considered Very Poor. 

Will less than ideal credit affect you right now? 


According to a recent article on Fool.com dated December 29, 2020, the pandemic may have made banks more conservative with their lending. 

Credit card issuers will be looking to lessen their risk too as many consumers face unemployment and other financial challenges brought on by the pandemic.

Not only will be harder to get credit, but the terms will be stingier as well.  Credit limits will be reduced, while interest rates will rise, even for those with good credit. 

It’s important, now more than ever, that you ensure your credit score continues to improve!

Bad Debt Consolidations

Maybe you feel like you’ve “tried everything” but your debt just isn’t going away?

Fear not, just because the solution hasn’t been easy to find, doesn’t mean it’s not there.

Despite a poor credit score, there are many lenders that will offer you consolidation loans, however this usually comes at a price. 

Make sure you’re armed with as much information as possible before you sign on the dotted line and always start your search with the cheapest options first!

Does the wrong information affect my credit score?

The short answer is YES.

So lets start with looking at WHY your credit is bad.

There could be many reasons for this and our next step will depend on your biggest WHY.

One of the simplest reasons could be the wrong information on your credit score.

I know we all assume that big brother knows everything about us but the wires can often get crossed and it can make us look really bad to potential lenders.

First step is to check the information that ALL THREE credit bureaus hold about you and the people that you are financially connected to.

As I mention earlier – we need to get organized.

You can’t make a plan unless you know where you stand right now

There are loads of free templates available on line, or you can just use a good old fashied pen and paper

Alternativly you can download the one I made – FOR FREE HERE

I’ve also don’t some checklists and quizes that night help you out.

So go ahead and download the FREE checklist now so that you are approaching this in a methodical manner.

Then use the FREE spreadsheets too so that you are crystal clear on exactly how much money you need to clear your debts and what they are all costing you.

The main thing here is not to panic, it won’t help the situation and it certainly won’t help you plan your way out of it either, so find a way to settle your mind and get yourself organized.

This might seam like an inconsequential step but it really isn’t.

Sitting down to really look at your debt situation can be a traumatic experience for many people and you need to prepare yourself mentally, just as an athelete prepares physically for a marathon.

Check out the 7 simple steps to debt freedom and make yourself an exit plan.

This will be individual to you but will probably involve at least some of the steps in our detailed action plan. It will hopefully help you to get a few quick money saving wins and arm you with a really good idea about the extent of your debt and budget contraints.

If you’ve done all this an realise that you do need a consolidation loan, debt relief order or remortgage, then that’s OK, at least you are sure that you didn’t miss a trick along the way.

Before you jump into any expensive solutions – check out these posts, printables and checklists – they might be just what you need!

So, If you do feel like you’ve been through all the normal channels, or you just can’t focus on anything else and you all you really need is to get a new line of credit so that you can breathe again, then look at your consolidation options and the wide range of specialist companies that can provide loans and credit cards even if you have a poor credit record. – be very careful though and make sure that you get good impartial financial advise before you do anything though

0% credit cards

Don’t forget to check out debt charities in your area and if you feel like the stress of all this is just too much, get some support. Spending for many of us can be an addiction; a habit that we use to fill an emotional need. Being practical about your debt is one thing but being pragmatic about how you can stay debt free and happy may be a slightly longer journey.

Wishing you all the best in financial health!


  • LinziBee

    Hi, I'm Lindsey and I really love helping people & businesses get their money organised & their systems optimised. (I'm a bit weird I know) I have an MBA in finance & have been a self-employed management consultant since 2013. I've been super privileged to work on a wide range of projects in that time & each one has been an amazing opportunity to learn something new. This site aims to create a bank for that knowledge so that you can shortcut your journey to success & hopefully skip all the mistakes that I made! www.linkedin.com/in/uk-lindsey-briscoe

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