There are a ton of things you need to worry about for simply existing, and you’ll want to agree with me when I say your credit score is one of the most important. You must check constantly to ensure it doesn’t fall below the accepted standard, which is a pain for anyone.
Since numbers are pretty complicated, it may help to turn to websites like ours to know if your credit score is still acceptable. If your credit score happens to be 518, should you be worried? Is 518 a bad credit score on the FICO scale?
In this article, I’ll analyze the 518 credit score and let you know if it’s an acceptable credit score in 2022. Then, you’ll learn some of your loan and credit card options with this credit score and some suggestions for improving a 518 credit score quickly.
Is 518 a Bad Credit Score?
When you look up the average FICO credit score rating for an American, you’ll notice it’s 711. 518 is almost 200 points below what’s supposed to be the average credit score rating. While there’s an in-between for credit ranges, I’m afraid 518 doesn’t fall into what can be described as a good score.
Moreover, 518 is not a fair credit score either. If your credit score has fallen to that number, you now have a very poor credit score, which prevents you from accessing a load of things you’d otherwise be able to access with a better credit score rating.
Some more bad news about a 518 credit score is that 99% of Americans have a better score. With almost everyone having better credit scores, there’s no real reason why any lender will want to do business with you.
Projections show that around 70% of customers with such a low credit score will likely become seriously delinquent in no time. If you’re serious about fixing your finances, you must start with improving your already terrible credit score.
To answer the underlying question: is 518 a bad credit score? The answer is yes, it is. It’s not just a bad credit score, it’s a terrible one, one you should work on improving immediately. But the question is: how do you improve a credit score that’s this bad.
Having a credit score of 518 already shows that your finances are pretty messed up, but there’s still hope of redemption. If you intend to improve your credit score, you may want to continue reading this article.
What Affects My Credit Score?
If your credit score has fallen to around 518, you might be wondering why that is the case. The truth is that there are so many things that might affect your credit score, and multiple factors can also work together to give you such a low credit score.
If you’re not sure why your credit card is that low, here are some common factors that might have impacted your credit score.
- Credit utilization rate
Your credit utilization rate is a measure of how much of the total possible credit you’ve used on a credit card. For example, owing $300 on a card with a $1,000 limit will add up to a credit utilization rate of 30%; you can reverse engineer that to calculate the utilization rate across your cards.
It’s crucial to note that a lower credit utilization rate is generally better for your credit score. If you’ve almost hit the limits on most of your credit cards, you should expect your credit score to be decreasing steadily.
- Public information
The information publicly available about you in the public will likely have a huge impact on your credit score. If you’ve previously filed for bankruptcies or other unfavorable financial conditions, you’ll likely see a massive decrease in your credit score.
If you have pending legal issues, settling them should increase your credit score massively. When it’s a bankruptcy, however, it will continue to reflect on your credit score for a specified number of years before finally going away.
- Late payments
The single most impactful factor that affects your credit score is how quickly you pay off your debts. If you pay your bills consistently and on time, while maintaining a low credit utilization rate, you should be able to increase your credit score massively and consistently.
Now that you know what constitutes a bad credit score, you should also know why you should avoid it at all costs. The following section should show you why you should avoid a bad credit score at all costs.
Effects of a Bad Credit Score
Granted, 518 is a terrible credit score, but why does it even matter? Why should you try to increase your credit score if it’s that low? As you’ll learn in this section, having a credit score that low can impact you a lot.
Firstly, a 518 credit score will make it impossible for you to get a loan anywhere. Even if you find a lender willing to loan you money with that score, you’ll be forced to pay an insane interest rate than someone with a more decent credit score.
In most cases, having such a bad credit score will make living significantly harder since you’ll need a cash deposit for regular utilities like a phone payment or internet service. It will also be much harder for you to get an apartment or a job if your landlord or interviewer decides to run a credit check on you.
To ensure that you don’t have to face those issues, you may want to avoid everything that affects your credit score. If you can get your credit score to the good or at least the fair range, you should be able to avoid most of the effects of a very poor credit score.
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There’s no doubt that the answer to “is 518 a bad credit score?” is yes, it is. To live comfortably in the United States, you may want to improve a good or fair credit score at least. When you avoid the factors that impact your credit score, doing that should be a piece of cake.