A bank or money lender has the right to deny your loan application based on your credit history. They first thing they ask for is your previous bank statements to ensure that they are lending the mortgage to the right and responsible person. However, there are genuine reasons for a person to become a defaulter. These reasons could be unexpected and unavoidable due to which the person failed to clear their debts on time. 

North East private mortgage loans and similar agencies are meant for those who have been through such circumstances. Despite a bad credit history, the lender lends the money to the borrower and expects good returns from them on repayment. Let’s discuss some common factors that are responsible to put a borrower in bad credit report.

What factors are responsible for a bad credit history?

• The person failed to clear dues on time:

This is one of the common reasons why a person’s credit history can be affected. Due to various reasons (genuine or not genuine), if a person fails to clear his/her dues on time, they will not be appreciated by the credit bureaus.

• The situation has gone to the collection team:

This stage is usually considered as the second stage. Every bank or money lending institution has a collection team. The case of the customer is registered with them when the borrower fails to repay his or her bills despite many warnings and reminders. The collection agencies are usually third parties hired to forcefully extract the amount from the borrower. Trust us; this can be really bad for the borrower’s credit profile and well-being as well.

• Borrower has filed for bankruptcy:

If an individual or a company has filed for bankruptcy, their entire reliability and credibility comes on stake. It is an extreme step where the borrower’s details are recorded in their credit statement for over 7 years. 

• Considered a defaulter in bank statements:

Companies or individuals are considered to be defaulters and they are marked in the blacklist for non-clearing the dues on time. This is bad for any person with a good rapport in the community. Moreover, for a company it is worse to run with the same impression after coming in the defaulter’s list.

• Black remark on the credit report:

Black remark occurs in case of charge-offs. The creditor will strike a charge-off to the person who has been stagnant in non-repayment of loans for a long time. It means that the account holder is no longer allowed to make payments or purchases from that account.