Bad credit implies that an individual or business has a low credit score or rating. Credit histories are reported and kept in publicly accessible databases.

FICO (Fair Isaac & Company) is a credit rating institution that gives individuals a credit rating score based on reported credit histories. Scores range from 300-850, generally, but they also issue ratings based on auto loans and credit cards, which are on a scale from 250-900.

The average score is currently about 700, with “bad credit” being somewhere below 600. Individuals and businesses with bad ratings will find it harder to get loans and credit cards with high limits. They will also be charged higher interest rates on their loans and credit card debt than individuals with very good credit scores.

Employers and potential business partners also tend to query the credit score of people and businesses they are evaluating. People who have become swamped with debt and do not have the cash flow to pay the debts off will sometimes decide to work with a debt consolidation company or debt settlement company.

While consolidating debt isn’t as bad as seeking debt settlements, both will hurt your credit score. Declaring bankruptcy, of course, will also ruin your credit score, and it is highly unlikely that someone who has declared bankruptcy in the recent past will be approved for any sort of loan or line of credit.

People can access their credit scores through services like Equifax, where they are permitted by law to get one free credit report each year.