A bad credit score refers to the state of your personal credit if your score is poor. In many cases, a poor credit score means you will not be eligible for applying for a new credit or a personal loan. Things that count against your credit score include bankruptcies, tax liens, and unpaid or defaulted debt, and legal steps may be taken against you.

In general, credit scores are measured in between 300 and 855 with a credit score of 700 or above is considered good, a score of 800 or above considered excellent, and a credit score under 600 as poor.

A credit score is important both for finance and professional life because one is generally dependent on the other. There are a few factors that can lead to a bad credit score:

1. Foreclosure

If you are not able to keep up with payments on your home or car, the lender could foreclose on your account, meaning may lose your home and other assets (i.e., wages).

2. Loan default

If you cease re-paying the monthly loan payments to your lending bank, you will be considered in loan default, and your credit score will automatically decrease.

3. Late payments

Delaying your monthly payment on a loan can also affect your credit score as the payment history accounts for 35% of the credit score.

4. Collection accounts

Any personal debts can decrease your credit score. If you have taken a loan from a company and were unable to repay it, then the company will give the charge to the third-party to obtain the payment, and your credit score will suffer.

5. Bad credit effects

The impact of a bad credit score can affect you day-by-day. It not only creates a bad impact on your professional life, but it can also create its impact on your personal life too. The major problems you can face with low credit score include:

• Personal loan rejections
• Bad loans with restrictive terms and high-interest rates
• Difficulties finding a rental apartment
• Jeopardizes security clearance for a new job
• Makes purchasing a new smartphone plan difficult
• High premiums for insurance

What is the function of FICo?

FICo is the functional component of SAP ERP. It is responsible for determining your personal credit. It helps the financial organizations to manage their financial data. It helps them in analyzing the financial statements for effective decision-making and business planning.

To repair your credit score:

• Regularize your debt repayment
• Regularly check your Credit Utilization Ratio
• Pay off existing debts in total
• Pay off the balance of your credit cards
• Keep the accounts open and maintain a 0 balance