Having a "bad credit history," a "bad credit rating" or simply "bad credit" usually means your credit reports show negative credit behaviors in your recent past.
Credit is simply making a purchase or borrowing money with the agreement that you'll pay later. A lender's willingness to let you use credit is based on trust that you'll repay what you borrow, along with interest charges, on a schedule you agreed to when you accepted the loan or credit terms.
Broadly speaking, bad credit will arise if you do not repay your debts according to your borrowing agreements.
Events including late or missed payments can hurt your credit, but some digital lenders like OPesa, OKash, CreditHela to mention but a few may enable you recover from them before your credit is considered bad if you resume paying your debts on time.
However, the following severe missteps can lead to bad credit ratings that will take you time to recover from.
a). Defaulting on loans that's, going for 90 days or longer without making the scheduled payments.
b). Having unpaid loans referred to CRBs or go into collection agencies.
c). Filing for bankruptcy relief from debt you cannot manage or repay.
If your credit history reflects any of the above situations, you may be considered to have bad credit. But it's important to remember that with time and discipline, you can improve your credit.
What Is Considered a Bad Credit Score and Rating?
Many lenders evaluate potential borrowers' credit ratings using credit scores: three-digit numbers derived by performing statistical analysis on the information in your credit report.
Credit scores predict how likely you are to fail to repay a loan, with higher scores indicating lower risk that you'll fail to meet your loan repayment obligations.
Consequences of a Bad Credit History and Rating
Individuals with good credit enjoy many advantages, but if you have a poor credit history and rating, lenders may be reluctant to do business with you.
That means, it may be difficult for you to get loans from other lenders. And if you manage to get one, you'll likely be offered a relatively small loan amount and you may have to pay a relatively high interest rate.