Many types of people don’t understand if they come in the category of bad credit people or not. You might be viewed as a person with bad credit history by a particular lender and not by the other, as the standard may vary from lender to lender.
The lending officials will guide you if you fall under the category of bad credit or not. However, certain critical factors on your credit report can make a lender consider you are a risky person to lend money to.
Don’t worry if you fall in the bad credit category because you can benefit from North East home loan refinancing.
Find out how in the upcoming sections.
#1-Missing Credit Card Payments
Missing out on a Credit Card payment may seem like a small thing, but they can mess up your financial history and make lenders think you are an unreliable person to lend money to.
Although you might have missed a Credit Card payment just because you forgot the date or considered paying it next month with higher interest, it still is seen as a Red flag in your financial history.
This information regarding bad credit can help you understand the significance of paying your credit card bills on time.
Mostly annual or five-year financial status is seen before lending money to a client, so if you missed a Credit Card payment ten years ago, there are chances that it won’t impact the lender’s decision.
#2- Defaulting a Loan
You are considered a defaulter if you have lent some money or any service like mobile or utility that you have failed to pay for on time. The service or utility provider closes your account because of the missed payments, regardless of the amount of money you owe.
Most banks or utility providers will close your account if you have missed, on average, three payments, but this may vary depending on the terms and conditions of a particular lender. Ensure in-time utility and Bank payments to avoid being listed as a defaulter.
A default remains on a person’s credit file for at least six years after the date of being a defaulter, even if you have paid the debt. A lender cannot re-register your default status, but you need to pay the remaining amount.
#3- Bankruptcy History
If you are recently released from bankruptcy or have a history of being bankrupt, then it is the major Red flag that lists you as a bad credit status holder.
To sum up, additional documentation may be required from people with a history of bankruptcy before any bad credit mortgage firm lends them money.