Have you ever applied for any kind of loan, and had to face the disappointment of your application getting rejected in the end? Creditors will look into your documents thoroughly before giving you the approval. In most cases, these loan applications are rejected either because of poor credit ratings, or due to poor financial management.
Therefore, before you apply for any kind of loan, it is necessary that you make sure that all your bills for credit cards are paid well on time, and all the old loans are regularly paid back. If you don’t have your finances in order, you will be simply overburdening yourself with additional loans.
“SimplePersonalLoans” is one of the best lenders offering faster loans for the most competitive rates. They also provide loans to people with poor credit standings, but you must remember that your credit score is very important. It will decide how much credit worthy you are, and all lenders are going to check that before considering about approving your loan application.
Knowing the various causes of having a poor credit rating may help you in avoiding such pitfalls, some of which may even take many years to correct. Few reasons of having bad credit score will be caused by number of key elements, which are as follows.
- Late payments
Almost 35% of the credit score is based on your credit history and hence it is important to make all your credit-card payments well on time so that your credit score remains attractive.
2. Defaulting on payments
In case you fail to pay your all bills for credit-card then poor credit score will be fully assured. Additionally, after few months all your unpaid accounts is going to be charged with additional penalty.
3. A charge off
When your creditor will see that you are not intending to make your payments on your balances then your accounts will become charged off. Any charged off account status will be extremely harmful for your credit score.
4. Collection accounts
Your creditors can also hire or sell all your offending debt to any third-party debt collectors who will try to get payment from you. Often this step is taken before charging off the account.
Mostly collection agencies may use questionable methods in order to compel you to pay that includes threats of lawsuits or calling at your work place or to your even family members.
5. Defaulting on loan
If you default on your loan then your score will be affected in same way like charge off. This will show that you are credit risk individual.
6. Filing bankruptcy
For credit score bankruptcy will be most harmful.
7. Foreclosure
Loan default and foreclosure has almost the same effect so far as your credit score is concerned. It too will send message to your lenders that you happen to be high credit risk person.
8. Judgments
Any unpaid judgment will be much worse as compared to paid judgment. Your creditors will look at judgments as they show creditors about your inability to pay has forced them to go to court.