Habitual Bad Credit

There are two types of bad credit – situational bad credit and habitual bad credit – and they are looked upon differently by lenders.

Habitual bad credit is just what the name implies – a person who rarely pays their bills on time, ever.

Habitual bad credit isn’t the same as situational bad credit, which is usually caused by a life-altering incident such as a divorce, job loss, or health issue, when a person with generally good credit suddenly falls behind on their bills, causing their credit score to drop.

Loan applicants with both types of bad credit could have the same credit score, but a subprime lender will look more favorably on the person with situational bad credit since they've exhibited good credit habits in the past.