Credit Reports- How did I get Bad Credit?

We often hear people mention the term Bad Credit but many of us are a little unsure of its true meaning.

What is Bad Credit?
Bad Credit is when negative listings or lack of credit history on your credit report cause a low credit score. This may result in denial of credit completely or in some situations only qualifying for a loan at higher interest rates. Low credit scores may be the result of a previous loan default or even from not paying a bill on time. Banks and other lenders are also know to deny people with a bad credit file from opening up a cheque account. This would especially make things hard for potential business owners.

What is in a Credit Report?
In much the same way that a resume displays your work experience to a prospective employer, a credit report provides prospective creditors (and in some cases employers and insurers too) with a detailed picture of your credit history. And like a resume, your credit report can influence whether you receive what you are applying for.

You can almost guarantee that if you have ever made a credit card, personal loan or insurance application that there is a credit report about you. This report contains information like your address, the way you pay your bills and also if there have ever been legal proceedings against you. Bankrupts will definitely appear on this report.

The credit report agencies then sell this information to creditors, insurers, employers and other businesses. The information is then used to work out whether you will be approved for a loan, credit card, insurance a job or even real estate.