What Is Bad Credit

We are always hearing about the debt problems and the term bad credit, but in fact there are too many people who don't exactly know about bad credit, some people may be in bad credit problems and they don't really know that.

Some people apply for a certain type of loan, or want to finance their property's and get shocked when their application is declined ! they even don't know why it declined.

To get through the term - bad credit - we have to define it first, it is a situation rather than a regular term, to simplify it more, let us consider that you have borrowed your first time loan, automatically, there are a credit score record that will be initialized for your actions (monetary behaviors) during the period of repayment to that loan.

The credit score is a measurement of your commitment to that loan, it is usually a points scale which are ranging from 300 to 900, the higher points the better credit score. That's it, when you fail in one repayment or installment your credit score will be affected by a deduction from your initial value (your initial value always between 850 and 900). Also any late repayments will affect your credit score, so you will struggle to keep it above 650 points to be at the safe side.

Let us assume that your credit score is gone too low and dropped below 599 points, then you will be considered as a bad creditor, which means that your credit score is under the average score, and all the lenders will consider you as a risky choice if you applied for another loan.

The best procedure to follow in this situation is trying to improve your bad credit score, There are too many ways to improve your credit score. It is a logical procedure and anyone who falls into a bad credit will try to do it, it is to have your debts repaid, but how ?

The best way to repay your old and existing debts is to apply for a debt consolidation loan, you can go to any lender who offers this kind of loans, and ask him to consolidate your debts, then they will study your case and give you a debt consolidation loan to improve your credit score, that's it.

There are a small problem about bad credit debt consolidation loan, which is the high interest rate if compared to the other loans, but if there are no choices, it could be your best choice.

Finally, during the world financial crisis, interest rates are subjected to some kind of study, and for sure the studies will result in a huge reduction of interest rates, to make it in a more acceptable range that lies within the borrowers demands and their ability to repay their loans, so from now on we will have to pay attention to our credit scores, since after lowering the interest rates, there will be no excuse for us to explain our bad credit scores.