The term bad credit relates to a variety of potential factors and elements that display on a credit file of an individual. This can be caused by a wide variety of reasons and generally fall into the several categories. The problem for the individual is that having bad credit in terms of items displayed on their credit file will have a detrimental effect on their ability to borrow money. The reason for this is that the person’s credit file will generally be utilised by a lender to make the relevant lending decision and if forms of bad credit are contained within the file, the number of lenders that will offer any form of finance or loan to individual will be significantly reduced, if any at all.

When an individual applies for a loan, the lender takes into account a wide variety of different factors, these include age, employment information and also they take into account normally, a credit check which is from a company that collates the information in the form of a credit file. This is then utilised to make the lending decision. However due to the recent recession, more and more individuals have now found that they now have bad credit in the form of

• Late payments
• CCj’s otherwise known as County Court Judgments
• Defaults
• IVA’s otherwise known as Involuntary arrangements
• Bankruptcy.

Depending upon the severity of the bad credit or the situation, information is contained on the file for a period of time. This can range from one year through to 6 years. This information is displayed on the person’s profile when a lender does a relevant search after a loan application.