Bad Credit History – Causes and Recovery

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Credit Card Applications » Research » Guides » Building Credit History » Bad Credit History – Causes and Recovery

Bad Credit History – Causes and Recovery


Updated: December 26, 2012

The content is accurate at the time of publication and is subject to change.

Bad credit history affects almost everything in day to day life, and makes it very difficult to deal with financial transactions without mandatory credit checks. There are many causes for bad credit history, among which the most important ones are listed below:

Bad credit history affects almost everything in day to day life, and makes it very difficult to deal with financial transactions without mandatory credit checks. There are many causes for bad credit history, among which the most important ones are listed below:

  • Bill payments - slack in timely bill payments is the most general cause for bad credit history. Even partial payments can get negative scores on the report. Along with this, late payments and non-payment of credit card or utility bills can accumulate a substantial amount of interest, making it difficult to recover from the negative scores on the report.
  • Errors on reports - Some times, error in credit reporting can cause credit scores to drop. Wrong entries, or wrong transactions recorded can cause a bad credit history and the consumer will not come to know of this if the credit report is not checked regularly.
  • Unsuccessful Applications - Applications for loans and credit cards that are rejected can also cause low credit scores. Even multiple applications for any kind of credit or loan can hurt credit scores and result in bad credit history.

Having healthy financial habits and being cautious about spending from credit can help recover from a bad credit phase. General good practices go a long way in saving credit report from negative scores. Here are a few steps that can help in recovering from a bad credit history:

  • Orderly bill payment can help in improving the credit scores. There are so many ways to manage credit card debts including balance transfer cards, debt management, debt consolidations, and consolidation loans. Employing one of these ways can be very beneficial in gradually clearing debt, which in turn boosts the credit score.
  • Avoiding late payments by scheduling automatic bill payments can also be beneficial in improving credit scores. Even a single late payment can cause damage to the credit history, along with the late payment fines and interests charged by the credit card companies.
  • Checking the credit report regularly can help in identifying erroneous entries which can hurt the credit scores. Fair Credit Report Act gives the right to consumers to claim the wrong entries and clear them in due time. It also gives the advantage of one free credit report for every consumer. Credit card users should make use of this to check the up-to-date copy of their credit report, and report all the wrong entries. Credit card companies must respond to this and clarify or clear the report within a specified time.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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