What is bad credit?
Every citizen of the country has a social security number which is their identity to be a member of the country. As per their financial transactions of debits and credits in life, they get a credit score. You can call it FICO score too. Similarly, this credit rating creates the credit history of an individual. Which can improve or deteriorate by the financial transactions one makes in his life. Bad credit is one of the credit ratings one can have by his financial behaviours.
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How a credit goes bad?
There are two reasons for having a bad credit rating.
First, when a person starts owing a lot to different sources(lenders). In addition to that, he could not pay back on time. As a result, he starts being behind on payments. His credit scores keep going down because of this pattern.
Second, if a person does not make any transactions. A contrast to that, his credit scores do not come up and he has a bad credit rating. This can come up by buying and making transactions after some intervals.
Impacts of bad credit:
A poor credit rating affects in many ways. Most noteworthy, an individual does not get credits from many sources. Likewise, he gets a high rate of interest. He loses many options for getting good financial deals. A bad credit scorer gets a negative financial image.
Perhaps a person may get problems in getting a good job, house loan, car loans. Also, they get bad deals of student loans, catalogue loans and other loans. Poor credit turns into a very poor credit score if one does not try to improve it.
How to improve bad credit?
A poor credit is not a permanent state of an individual. Eventually, after lot many efforts it may come up. One has to pay off loans and credits on time within terms to improve their credit scores. A credit rating gets divided in a range from 1-999. Hence, 999 is the highest credit score and it goes in descending order to be bad. When a credit score goes below 500, it starts going bad below this point. One has to keep an eye on his credit rating on regular basis to keep it always good and above.
Positive financial transactions where a person lends and payback within term are good. Also, it pulls up the scores upwards. If you have a poor credit rating, need not to worry. Start doing improvement in the direction which leads to a good credit score.
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