Why is it hard to raise cash with a bad credit report?

The information in a credit report is sold by credit agencies to organisations that are considering whether to offer credit to individuals or companies.

It is also available to other entities with a "permissible purpose". The consequence of a negative credit rating is typically a reduction in the likelihood that a lender will approve an application for credit under favourable terms, if at all.

Interest rates on loans are significantly affected by credit history—the higher the credit rating, the lower the interest while the lower the credit rating, the higher the interest. The increased interest is used to offset the higher rate of default within the low credit rating group of individuals.

Note that is not the credit reporting agencies that decide whether a credit history is "adverse." It is the individual lender or creditor which makes that decision, each lender has its own policy on what scores fall within their guidelines. The specific scores that fall within a lender's guidelines are most often NOT disclosed to the applicant due to competitive trade reasons.

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