An unfavorable credit history is when credit card or loan payments are missed and recorded on your credit report. Your unfavorable credit history can also lead to bankruptcy.
If you have an unfavorable credit history, this may indicate to lenders or companies that you are not responsible or have poor creditworthiness and should not be given credit, as it shows that you have a poor payment history on one or more of your loans, credit cards or other debts.
Your credit history, found on your credit report, provides a summary of how you use credit. Your credit report shows how much debt you have and whether you pay your bills on time.
Credit scoring companies such as FICO use the information shown on your credit reports to arrive at your credit score.
FICO weighs factors such as the amount of money you owe, the length of your credit history, the amount of new credit you have, the type of debts you have and your payment history to determine your credit score.
Some factors are given more weight than others. That is, if your payment history is 35% of your credit score, while the length of your credit history is 15% of your score.
The seriousness of this is that the length of time of credit problems can determine whether you have an unfavorable or undesirable credit history.
If you have a bad credit history, lenders and credit companies note that it is risky to grant you credit because you may have too much debt and would be unlikely to complete all your bills on time.
Riskier people with a bad credit history tend to have more difficulty obtaining credit, have fewer credit options and receive higher interest rates.
Remember: having a bad credit history can lead to being turned down for loans, including a student loan or a mortgage. And each time you are turned down, this application will appear on your credit history, which will negatively impact your credit scores.