People in the U.S. can find out if they have bad credit by requesting a free credit report from a government authorized website such as AnnualCreditReport. The credit score is a separate service that charges a fee.
Bad credit means a bad credit history. A person with bad credit has not been paying his credit card bills on time and owes large sums of money to lenders. Apart from bad credit, there is also the concept of no credit, which means that a person never had a credit card or never took out loans from financial institutions such as a bank or a credit union.
Various companies that provide credit look at their prospective customers' credit reports. These could be employers, banks or car dealers. They want to make sure that the loan they issue will be secure. These companies calculate people's credit score based on credit reports, according to their own rules.
The potential lenders will look at the number of credit cards and loans people have, the total sum owed on those, the length of the time people have had credit cards and their borrowing limit. Having bad or no credit generally means difficulty in getting new credit cards and higher interest rests. Banks would not offer loans to people with no credit history.
Three companies in the U.S. calculate credit reports for American residents. These are: Equifax, Experian and TransUnion. By federal law, anyone can request his credit report once every 12 months from one of these organizations. The reports can be ordered from all three at once, or they can be spaced through the year, one organization at a time.