When we are talking about Credits, there can be two situations, first, when you have bad credit that is the lenders are not willing to lend you anything and second when you have excellent credit and every potential lender, banks or credits companies are ready to provide you loan whenever you ask for it. You can be from any of these two categories. Here’s everything you should know about bad credit. 

What is bad credit?
Bad credit is the description of a person or a company according to their past ‘negative’ loan repayment information. If a person or a company has a past history of inability to pay the debt on time then its lead to bad credit.

Credit histories are used to get obtain credit scores. A low credit score equals to bad credit and high credit score means good credit!

What happens due to bad credit?
Poor credit history or low credit score can negatively affect your finance. The most common thing that happens due to this is being denied a line of credit. A low credit score or Bad credit creates an image in front of the lenders that you are a high-risk borrower. In such cases, you will be denied for a loan or you may face some difficulty in acquiring a loan.

Bad credit can even result in higher interest rates or high payment in fees, this increases your monthly payment (also known as subprime loans). But these do help in paying off credit cards.

How can you check your credit score?
There are several credit reporting agencies which can help you in preparing a report of your credit (even free of cost). Three popular credit reporting agencies are as follows.

• Equifax®
• Experian®
• TransUnion®

You can see your credit within 60 days of credit denial if you are unemployed, or on welfare or your report has some inaccuracy.

Tip: Go for a credit report from each of the three credit reporting agencies mentioned above. Review them carefully, compare and find out the inaccuracies.

How can you improve your credit score?
There are several ways you can improve your situation of bad credit. Here are some useful tips that you should try.

• Pay all your credit card bills on time
  Even a two-day delayed bill payment has a huge impact on your credit score, so try for timely bill payments.
• Don’t make a number of credit cards
  Opting for a number of credit cards doesn’t improve your credit score rather if things go wrong, it can result in lower credit score.
• Contact creditors if you are having a tough time making ends meet
  Seeking assistance from good credit counseling services can help you a lot if you are facing troubles in managing your finances. This doesn’t have any effect on your credit history.
• Use old accounts
  One of the easiest ways to improve your credit score is to allow your credit accounts to get old. Use your old accounts periodically to keep them active. This will help in increasing your credit score.