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The term bad credit refers to the poor or below average status of an individual's financial stability. This poor score could be a result of default payments, too many loans and consumers who still apply for additional loans or inability to repay the credit taken. Every time one of these situations occurs there is a negative score on a individual's credit score and credit rating.

Banks, Housing loan financial organizations, credit card issuers all look at an individualбпs credit score and credit history. This is the deciding factor that helps banks approve a loan or credit or disapprove it. In other words a bad credit only equates to disapproval of loans or any form of financial credit.