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Your credit score represents the amount of risk a lender takes when approving your request for a loan. You can understand that if you are a person that reached a bad credit score by not paying bills on time or paying them at all, that lender might be reluctant to offer you a loan. When a lender knows that you have a poor credit score but agrees to loan you money anyway, it is clear that the lender could be at risk. To cover that risk, a lender will set the terms in a way that will cover the risk. Your credit history can affect your chance of being approved for a loan and it can mean stricter terms in the contract.

Credit scores are evaluated using an industry accepted system known as FICO. When your credit is rated and ends up being less than 620, it is referred to as a bad credit score. WIth this type of score you can still submit an inquiry form for a fast loan, but the lender will probably take your score into account when preparing an offer. It’s highly recommended to take steps to increase your credit score when looking for a loan.

There are lenders who work with bad credit consumers. But to be clear, they take the entire situation into account. They can look back and see your pasat credit history – the good and the bad – before making a credit decision. It helps a lot if they see that your current situation has improved, that you have a decent income and that you’re paying your bills on time. No matter what your credit score is, the bottom line is that a lender wants to minimize risk.

Sure, a bad credit score can be improved. The steps can involve better spending habits, paying bills according to the due date and reducing how much money you owe. This can vary between individuals because it really depends on how you arrived at a bad credit score in the first place. If you simply went through a hard time and missed a few payments, you can improve your score by always sending in payments on time. If the amount of money you owe is too much, you can try to get some of it paid off. These are the types of actions you can take to change your credit history.

You can ask friends or look online for professionals who help people with their finances. When you find a service that you’re comfortable with, let them peek at your credit history, help you understand how your credit rating became bad and provide encouragement with practical methods of slowly building it back up. Find someone you trust to help you with this, because it’s a process where you need to know you’re working with someone you can depend on.