A bad credit will close the doors of many lending companies. But how does a person get a bad credit history? And, is there a chance for people to obtain bad credit loans?

Many lending companies will not consider granting a loan to applicants who have bad credit. This is because a person with a bad credit is considered a high-risk case. A high-risk loan applicant is simply viewed as someone who is not capable of paying off the borrowed amount. Lending companies will therefore avoid granting loans to such individuals. But how do people get a bad credit rating anyway?

Reasons for the Bad Credit

A person will obtain a bad credit mark due to several reasons. The major reason is that the person defaults on monthly financial obligations. For example, missed monthly repayments for credit card debts, loans or has mortgage arrears.

Another reason for the bad credit rating is having a CCJ or a County Court Judgment. A CCJ is recorded only when the person fails to pay the fine ordered by the court within the 28-day period after judgment has been made by the court. However, any other court case or legal impediment can be detrimental to one