Last updated on March 12th, 2025 at 03:30 pm
Your Personal Credit Report is more than a reflection of your financial standing.
It is a reflection of Your Financial Reputation.
It is also a reflection of your personal Character and offers a Lender a level of Confidence that they can Trust that you will fulfill your financial commitment.
Personal Character and a High Level of Trust are two very important values in all aspects of our lives, especially in the financial arena.
Think of it… if you have a bad credit report, it is most likely because you have experienced late payments, default payments, charge-offs, delinquencies, judgments, and a few other negative occurrences in your financial life that you have yet to address.
In simple terms, a bad credit report means that you have a bad reputation for not paying your bills, at least, this is how a creditor may interpret a bad credit report.
Regardless of the reason (or reasons) as to why you have fallen behind on paying your bills is mostly irrelevant to the lender (creditor).
In the past, the responsibility of a Loan Officer was to determine the probability of a borrower to repay a loan, and having a bad credit report is not a good start.
In our current lending markets, Lenders have incorporated Artificial Intelligence (Ai) throughout the credit approval process, making the Loan Officer a rare commodity, meaning that, it is less common today to have a human being (Loan Officer) involved in the credit decision as to whether to approve or to deny an application for credit.
This mere fact makes it extremely critical for all of us to prepare ourselves with a positive credit report BEFORE applying for any type of credit.
Think of it this way, if someone approached YOU, someone you did not know, and they asked you for a personal loan or a business loan, and then, after you took a look at their personal credit report, you see that they have a few negative remarks on their credit report, such as late payments and a few charge offs, would you extend this person a loan?
If you were financially prudent, and I know that you are, I would be willing to bet that you would not approve extending this person the money that they need, because the chances of this person paying you back the money that they borrow, according to their credit report, or rather, their financial reputation, would be very unlikely.
In other words, Lenders see a credit applicant with a bad credit report as a high risk borrower, and based on their credit report (financial reputation), the Lender must decide on whether to deny the credit applicant altogether, or to approve the credit applicant, under the condition that the credit applicant agree to a very high interest rate.
These are the kinds of decisions that Loan Officers used to make every day, but since the inception of Artificial Intelligence, the decision is made by machines, and Ai machines are programed to recognize a bad credit report and when they do, the credit application is quickly denied, in many instances.
Of course, Lenders still make lending decisions based on many other factors, but rest assured, that getting past the initial credit approval process depends heavily on what is included on your personal credit report and your credit score.
Now, not all bad credit is evaluated in the same way, as every Lender has their own loan approval policies and some Lenders have different lending products that they may offer.
There are some instances where your personal credit report may be deemed to be ‘not all that bad’ based on a particular lenders loan criteria.
However, TAKE CAUTION!
Even though your loan application may have been seemingly ‘approved’, in spite of your bad credit report and your low credit score, you might choke on the terms of the loan and the extremely high interest rate that is being offered to you.
Loan approvals for applicants with bad credit reports and low credit scores usually come with very high interest rates, heavy late payment penalties, a large balloon payment at the end of a short term loan, collateral requirements, and a few other undesirable loan conditions.
In my experience, there are too many people that do not care all that much about what their personal credit report says about them, that is of course, until they need to buy a home or lease an apartment, or buy a car, or fund an unexpected emergency.
There are a few other situations where your credit report may become a factor, such as, when you need to buy auto insurance, qualify for a job that pays in excess of $75,000.00 per year, or be considered for a government job requiring a security check and pass an employee background check.
Your good credit report and high credit score are the golden keys that have the potential to unlock so many favorable financial opportunities that can add tremendous financial value to your personal life, and this is why I believe that everyone should do all that they can to build and protect a positive credit report that reveals the best about YOU.
The credit repair process takes time, and you would be well served to have the best credit report and the best credit score possible at all times, because you never know the time-and-date of when a great opportunity will present itself, and you want to make sure that you are well prepared to take advantage of the best financial opportunities that unexpectedly happen to come your way.
CreditUpDIY is your FREE online credit repair system, and with our FREE Ultimate Credit Repair Guide, you can well be on your way to improving your credit.
