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There is no single lender standard for ‘bad credit’. Credit score interpretations vary from lender to lender, and depend on the items listed in your credit report. However, I have found that lenders can consider scores of up to 619 in the ‘bad credit’ range.

Although qualifications may vary from lender to lender, a general overview of how FICO scores are interpreted are as follows:

• 720-850 = excellent

• 700-719 = very good

• 675-699 = good

• 620-674 = fair

• 560-619 = bad

• 500-559 = very bad

You may want to consider bad credit repair if your credit score is between 500 and 675, especially if you are on the borderline between one credit type and the next higher one. An increase in just a few points can qualify you for lower interest rates on loans and credit cards, making payments more affordable and saving you money in the long run.

But, what exactly is bad credit repair? It is the act of working to remove and resolve erroneous and negative items in your credit report, such as credit accounts, loan accounts, collection accounts, slow payment histories, and inaccurate public records.

The process of credit repair works like this:

- You (or a credit repair service) obtain your current credit report.

- You (or the service) dispute any erroneous negative items with each of the three credit bureaus.

- Each of the 3 credit bureaus have a limit of 30 days to process and research each dispute.

- As each item is processed and disputed, the credit bureaus send an updated credit report.

- When the new credit report is received, it is reviewed to ensure that all erroneous negative items have been removed. If not, you (or the service) will dispute items again.

- This process will continue until your credit report is repaired.

The time period for completion of this process will vary depending on how many erroneous negative items appear in your report, especially if you are doing it yourself. However, most professional bad credit repair services report the ability to complete your credit repair in less than 45 days. The benefit of services like these is that your credit score can increase quickly with their help. Those with really bad credit and victims of identity theft especially should consider a professional repair service.

If your credit report is accurate, and you still have bad credit, the next question is: Is your debt under control? In this case, you may want to consider debt negotiation. Learn more about debt negotiation in my article entitled “Bad Credit Repair - What Is Debt Negotiation? Common Questions Answered”.

- Ken S.

© 2008