"Bad credit" is a term used to refer to a person's history of failing to pay bills on time. It also refers to a person's history of not paying bills in full. A person is said to have "bad credit" when they are unable to secure loans or lines of credit due to their credit score. Bad credit can affect your ability to get a job, rent an apartment, purchase a car and get approved for utilities such as telephone and Internet services. A low score can be the result of a number of things, including:• Not paying your bills on time• Not paying your bills off in full• Having a bankruptcy on your credit report• Having a high debt-to-income ratio (more debt than you can pay)• Having a history of multiple credit cards or lines of credit that are maxed out or close to being maxed outA person's credit score does not reflect how much money they make. Instead, it reflects how well they have managed their money in the past. If you have good credit and have managed your money responsibly, you may qualify to have a loan with a lower interest rate and monthly payments that are more affordable.Actions You Can Take to Improve Your Credit ScoreThere are several actions you can take to improve your credit score:• Pay your bills on time• Pay your bills off in full• Avoid opening new lines of credit or applying for new credit cards unless absolutely necessary• Keep your credit utilization ratio (amount of debt compared to amount of available credit) below 30 percent• Keep old accounts open (record of previous responsible use of credit)• Don't close old accounts unless absolutely necessary; closing an account can negatively impact your credit score by reducing the average age of your accounts, which is one of the factors that makes up your credit score.
