In our system run by credit, it is easy to fall into a bad credit situation. There are various ways that people get labelled with bad credit, and once you get bad credit, it gets too difficult and almost impossible, at times, to get another loan. Also, when you have been fixing the bad credit situation and you think that you have already resolved the issues, it can still be difficult to get a loan approved. That is because the bad credit goes in your credit history, and it takes several years before it gets completely ignored by creditors.
It is important to take care of bad credit when it starts to happen so that it will not show up on your credit history. However, there are times when you get really stuck in a situation that prevents you to pay loans on time. For instance, you get sick for a period of time or lose your job. When you can, manage loan or mortgage arrears so they would not appear on your records. If you are trying to get refinancing, but still paying arrears, wait until you have at least 6 months of on-time payments before applying for a loan. Lenders look at your payments for the past 6 to 12 months before they consider your loan. The same is true for credit card or personal loan arrears. It is best to wait for the clean statements without missed or irregular payments on them.
In cases of defaults or judgements, getting a loan is not simple at all. They show up on your credit history for 5 to 7 years. If you have a very good excuse for the default, then you may still get a loan. In case of judgements, most lenders do take them seriously since they are court orders demanding you to pay for loans because you have breached the terms. You will most likely need a specialist lender in order to get a loan if there is a judgment seen in your credit history.
Getting under Bankruptcy Act Part 9 or 10 would also put a dent in your credit history. They go on your credit record for 7 years, such that even if you have fully paid your consolidated debts under Part 9 or 10, will still hurt your potential to get a loan approved. If you are in this situation, you will need a specialist lender to help you get a loan.
Any type of bad credit can give you a hard time looking for new loans or refinancing. But it should not be a big issue if you manage your arrears and unpaid debts well. In case you really need to get a loan again, there are specialist lenders that can help.