A borrower has a FICO score of 580 out of a possible 850. 

Melvyn Brooks has recently lost his job as a vehicle mechanic and has run into some financial problems.  His rented house in Newark is quite expensive to run and he has some outstanding debts.  His credit score is currently 580.

This score would be considered Poor on this scale, with Very Good being the highest rating. A number of variables affect the credit score, but with 580, the borrower would be considered a very high risk by lending institutions. The conclusion would be that Melvyn has had major debt issues in the past and has not always made his repayments on time. Lenders will not want to provide credit or loans to Melvyn until a more positive credit history has been established by him.

As a result of this credit score it would be difficult for the borrower to obtain any attractive offers from lenders, especially the credit card companies. Melvyn would have to pay enhanced fees and higher interest rates than many other customers. Larger down payments on installment loans and any mortgage would also be asked for by the companies. In addition he might not be able to obtain high credit limits or any loans at all.

The variables keeping this score in the lowest category are many late payments across a variety of accounts, including credit cards, mortgages and other installment loans. The fact that any late payments were very recent is extremely relevant. Charge-offs on accounts (in which the lender did not receive the entire owed balance) is a very negative consequence.  Finally, this borrower will have a public record and settlement showing on the credit report. This informs lenders that the borrower had been taken to court to collect on a debt.  

The borrower will need to re-establish some proven good spending behavior on existing accounts and allow time to eliminate some of the more negative entries beyond a period of as long as seven years.