Q: What is considered a bad credit score?

A: Typically, a credit score is a value expressed as a number between 300 and 850. This is the FICO score, developed by Fair Isaac & Company, but used by Equifax, Experian, and Transunion; the three largest credit-reporting agencies in the United States. There are other credit-scoring models, but most lenders rely on FICO, so we'll deal with that one.

Although the worst possible credit score is theoretically 300, scores below 500 are pretty rare. Prosper.com, the popular person-to-person lending site that helps people with bad credit find loans, will not match lenders with borrowers of scores below 520, and considers anything under 560 to be a "high risk" credit score.

People with credit scores below 620 typically do not qualify for the best loans. Instead, they get the infamous "subprime" loans. Therefore, 620 could be considered the cut-off point for "bad" vs. "good" credit -- but of course it's more complicated than that. Whether your credit is "bad" or "good" is really in the eye of the beholder -- the potential lender. If you're applying for financing on a Rolls Royce, then probably anything under 760 would be considered "bad," but if you're applying for a new cell phone, the creditor may think a score of 640 is great!

The median FICO score in the U.S. is 723; meaning that half of all people have a score higher than that, and half have scores that are lower. The mean-average score, however, is just 678, which tells us that there are a lot of people with bad scores "dragging down" the average from the median.

A decent way of seeing how your credit score ranks is to look at the Prosper grading system. As stated earlier, a score of 520-599 is "high risk" (scores below 520 are considered beyond high risk), but here are the other grades on the Prosper scale, along with corresponding credit scores:

AA: 760+
A: 720-759
B: 680-719
C: 640-679
D: 600-639
E: 560-599

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