Some people spend years building up strong, positive credit histories only to fall on hard times. It might take only a couple of missed payments or other signs of financial trouble to see the effects of all that hard work disappear.
In addition to making it more difficult to qualify for a mortgage or car loan, having bad credit can even make it more challenging to respond to unexpected financial problems later on. As those who read more online will see, however, there are lenders willing to work with even those whose credit histories are not perfect.
Many Ways to Damage Anyone’s Credit History
Lenders assess each applicant with regard to how likely they seem to be to repay any loan that might be offered to them. In most cases, the single most important consideration will be the quality of the would-be borrower’s credit history and their credit score.
Unfortunately, even consumers who have always tried to borrow and spend responsibly sometimes end up with blemished credit records. Some of the kinds of especially serious problems that will put many lenders off include:
- Bankruptcy. Of all the issues that can make obtaining a loan more difficult, bankruptcy is by far the most significant. A bankruptcy shows that an individual’s credit troubles become so profound and apparently insoluble as to merit the intervention of the courts. While bankruptcy will sometimes be the best option for particular consumers, those who obtain this form of legal relief can expect to have more trouble obtaining loans thereafter.
- Collections. When a financial obligation is not paid on time and there seems to be little hope of putting it in good standing right away, creditors will often assign the matter to independent collection agencies. In some cases, these third parties will even buy up older, outstanding debts from creditors and try to collect them. Both types of collection activities will normally be reported on credit reports and will make obtaining loans more difficult.
Flexible, Understanding Lenders Will Often Help
Even if serious problems like these might rule out loans provided by banks and other conventional lenders, there are typically other sources of financing to turn to. In fact, there are a fair number of lenders today who specialized in working with borrowers who have such marks on their credit records.