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Anything below 660 is considered a score where lenders will start to think about being reluctant to extend a loan or will request loan terms that are more stringent and expensive than if the credit score was higher.
Your business credit score is a major component in determining whether you can qualify for a business loan. Yet even with bad credit, you may be able to find financing solutions that work for your business.
Key Points:
- Don’t Panic - If your score is low it can be rectified
- Be Resilient - If you persevere you will succeed
- Be Courageous - You can still receive funding if you score is low
What Is a Bad Credit Score?
A credit score is a tool that helps a lender predict the risk of doing business with a borrower. A bad credit score is a number that tells a lender you’re less likely to pay back a loan as agreed, based on your credit history.
It can be tough to precisely say what lenders consider a bad credit score. First, there are different credit score types for both consumers and businesses. The score range that an individual lender considers to be bad might vary.
The two tables below provide an overview of how a lender might interpret two of the most popular consumer credit score options — the FICO® Score and VantageScore.
| Credit Score Rating | FICO® Score Range/ See here for up to date numbers |
| Poor | 300-579 |
| Fair | 580-669 |
| Good | 670-739 |
| Very Good | 740-799 |
| Exceptional | 800-850 |
Source: Experian
| Credit Score Rating | VantageScore Range/ See here for up to date numbers |
| Very Poor | 300-499 |
| Poor | 500-600 |
| Fair | 601-660 |
| Good | 661-780 |
| Excellent | 781-850 |
Source: Experian
What Causes a Bad Credit Score?
Here are some of the most common mistakes to avoid if you want to keep a good FICO Score or VantageScore:
- Late Payments: Payment history is the primary factor that influences both your FICO® Score and your VantageScore. Late payments could drive your credit score down faster than any other credit mistake.
- High Credit Card Utilization: Credit utilization — the connection between your credit card balance and limit — significantly influences your credit score. When you use a big portion of your credit card limit, it could impact your credit score negatively.
- Applying for Too Much New Credit: When you fill out an application for business financing, many lenders will check your personal credit as part of the review process. This credit access is called a credit inquiry. “Hard” credit inquiries, like those associated with financing applications, could damage your credit score if too many take place in a short period.
About the Authors
Written by: Michelle Lambright Black
Credit expert with over 19 years of experience, a freelance writer, and a certified credit expert witness.
More about me