Life is never smooth-sailing; there are good days and bad days. But overcoming them is an achievement that helps people evolve to the next level. Failures are the stepping stone to success, and people must find ways to revitalise themselves after a failure. Bad decisions, bad agreements, arguments, etc., are part of regular life, and while it may hinder people for a while, it is only temporary.
Generally, an average human being’s worst problem is a financial crisis. Most people go through this and end up having to take loans. Loans can sometimes dwindle a person’s savings, forcing them to take further loans; it is a vicious circle. But eventually, the mounting debt will reduce their credit score, rendering them unable to avail new loans. Several entities provide loans, but for people with bad credit business loans, personal loans, and such are never approved.
WHAT LEADS TO BAD CREDIT?
There are five causes for a bad credit score. Accumulation of these circumstances over time can increasingly damage one’s scores. The lower the scores, the lower the chance of them availing loans. The five circumstances for bad credit history are:
No Previous Record of Loans
People who don’t have a credit history are not likely to get easy loans with most entities. People below a certain age don’t have to worry about that, for example, people who are just starting out with jobs (generally, people below 30). Those who are on their first job may not have any prior loans on their credit history, and without taking loan credit, their credit score will be zero. Most entities approve loans for them if their financial background is clean. But for those who have never taken official loan credit (not from moneylenders) and have very poor finances, banks and agencies might reject their loan requests.
Delinquent Accounts
People who have taken mortgages, but have delayed payment or never paid their dues, are liable to have their mortgaged assets seized. When collection agents seize assets, they record them, reflecting on the individual’s credit history.
Delayed Loan Payments
Unpaid loan dues also lead to debt, as it increases the loan amount, and with interest, this amount keeps increasing. Every outstanding due adds to this amount and reflects poorly on the individual’s credit score. Delayed loan dues deter other agencies from giving them loans. Very few entities provide those with bad credit business loans or any other type of loan.
Credit Card Charge-Offs
Credit card companies report a credit charge-off when a credit account has remained overdue for a long time. The credit card payments have defaulted for so long that the credit card company closes the account rather than making the account owner pay. When a charge-off is recorded, it is a black mark on the credit history of the individual.
Bankruptcy
Those who have filed for bankruptcy even once are not eligible for loans unless they can prove their sound financial status. Bankrupt individuals will have to go to other avenues to rebuild their business or life. Some institutions, though, provide individuals with bad credit business loans, depending on the circumstances.
They are willing to provide small loans for people to get back on their feet. These entities are understanding and empathise with the fact that sometimes bad situations are unavoidable. Their loan schemes take a personalised approach to each person’s case without considering their credit history.
