top of page

What Are the Factors That Contribute to a Bad Credit?

A low credit score indicates a person's history of failing to pay bills on time and their likelihood of failure in the future. It also often reflects a bad payment history. Companies can also have a low score due to high debt, bankruptcy, unpaid bills, and more. A person (or company) with bad credit will find it difficult to borrow money, especially at competitive interest rates.

What Is a Bad Credit?

A bad credit score is typically considered to be anything below 620. However, creditors will likely approve a loan at a lower score if the borrower is an excellent candidate for the loan.

A bad credit score is determined by the information listed on a person's credit report, maintained by credit bureaus such as Experian, Equifax, and TransUnion. Lenders use the information in a person's credit report to determine the risk of offering credit to that person.

Factors of a Bad Credit

Even if a person does not have a credit score because they never took out a loan, they would have a credit report if they applied for a credit card and were turned down. In this case, the lender is likely to list the reason for the rejection.

Here are factors that make up a bad credit:

1. Payment History

Payment history is the number one factor determining a person's credit score. A lender considers how frequently a person pays bills on time. It also considers how often a person went past their due date and how often a person was sent to collections. Pay your bills in full and on time to get the best deal. If you cannot pay your bills in full, pay more than the minimum payment.

2. Total Amount Owed

The total amount owed is a category that measures how much a person owes on all open accounts, including mortgages, credit cards, auto loans, and student loans. If a person has a lot of balances, it can hurt their score. To improve your score, pay off all loans and credit card accounts.

3. Length of Credit History

The length of a person's credit history is also a crucial factor. It can affect your score in many ways and can end up hurting your chances of getting good loans.

To improve your credit score, avoid opening too many new accounts. It will also be a good idea not to close current credit card accounts because it will negatively impact your score.

4. Credit Types Used

Credit score is used to determine the risk of lending money to a person or company. If a person has a history of bankruptcy and foreclosure, it will negatively impact their credit score.

To improve your credit score, avoid opening or closing too many accounts. It will also be a good idea not to consolidate credit card debt.

5. New Credit

A good credit score depends on the length of time a person or company has managed their credit. Many lenders will not want to lend to a person with very little or no credit history if they do not make their payments. Too many applications for new credit cards or loans in a short period can hurt a person's credit score.


A person's credit score can make or break a person's chances of obtaining a loan. Keeping a good credit score will help you get the best deal when borrowing money, a great interest rate, and the best terms.

When Ends Don't Meet was formed to help the financial loan needs across multiple communities in the Southeast. We partner with 19 different lenders in numerous major metro communities. We are proud to offer affordable installment loans that give you money fast and help you build good financial health, delivering a personal service to an increasingly technological process. If you need installment loans for bad credit in Pelham, AL, we can help. Get in touch with us and get your loan today!

35 views0 comments


bottom of page