Bad Credit: What It Is and What Problems Follow It

December 02, 2020
Bad Credit

Do you know what bad credit is? Many people might know that it is something they want to avoid, but their knowledge about the topic is limited to just that. Some might even have no clue that they have it, as they are unable to identify the signs and consequences.

If you have little to no idea about what bad credit is, you are in the right place. In this article, we will tell you exactly what bad credit is and the problems that arise from it.

What is bad credit?

Before we talk about bad credit, we must first understand what credit is. In a sense, credit is the amount of trust a lender has in you to pay off whatever amount of money you borrow.

Credit is generally calculated with the help of a credit-reporting agency. This agency will take a look at your history to create a report, considering various factors that affect your credit score. Many factors can lower that score, such as not being able to pay a debt on time or missing out on payments.

Bad credit means that you have a low credit score. Usually, it is because you were not able to pay off a debt on time before, or you may have failed to repay it completely. 

What are the problems with bad credit?

You may be wondering what the deal is with bad credit. You can still borrow money from lenders, right?

That might be the case, but it will be much harder to find lenders that will be willing to do so, let alone give you good deals. Having bad credit means that it will be much harder for you to borrow money, as lenders will not trust you as much. This also means that it can be harder for you to build better credit because you cannot borrow in the first place.

Bad credit also affects many other things, such as insurance rates, utility costs, and interest rates. In many cases, you end up spending more to get something because lenders will need a “cushion of reassurance” just in case you end up not paying.


As you can see, bad credit is something you will never want to deal with. It will hurt your chances to attain good loans. But if you do have bad credit, remember that it is not the end of the world. It may be tough to fix bad credit, but it is not impossible. There are still plenty of ways you can improve your credit score.

For instance, you can look for the documented proof that you made good payments on previous loans. If you find any, you can present this evidence to support a new loan application, but make sure you pay on time and in full.

It will take some patience and consistency for you to regain a good credit score, but it will be worth it in the long run. Remember, going from a bad credit rating to a good one can help you find better loan deals in the future.

Hoopla Loans is South Africa’s fastest-growing online loan brokers, helping those looking to borrow money to identify the best loans they have access to. If you need online loans for bad credit, apply with us today!