The 3 famous credit bureaus look in to your credit scenarios and arrive at the data by few steps.  The bad credit representation is done in the form of credit score in credit reports. 

The following factors are considered:-
• Your overall income versus your bills
• The number of bills you have missed to pay on time.  It can be anything ranging from your grocery bill, telephone bill, electricity bills, insurance bills, loan EMI of anything
• The main number of data is extracted from your credit card repayments and loan repayments.
• Bankruptcy.
• It can also be due to not having any kind of credit transaction representation from the past, which means no lines of credit.

The disadvantages of having a bad credit are:-
• Banks and lenders may turn you down from giving loans
• You might have to bear high interest rates for loans and credit cards
• Sometimes you might not get low insurance premiums because of your bad credit

The points taken in to consideration before arriving at the bad credit score are:-
• The track of the payments you are making to all your bills.  Default and late payment in bills creates negative points.
• Limited number of debts is very important.  If you have more debts than which you can support that can also lead to a bad credit representation.  That is too much of bills to cover with income.

Some tips to prevent bad credit status:
• Try re-aging by which you can give a fresh start to your credit rating
• Pay your bills on time
• Do not borrow more than what you can
• Have any kind of bad credit errors rectified.

Every kind of documented payment and default is somehow registered with the credit bureaus.  If you are one with a bad credit you need to employ every kind of step to remove the label to make things inexpensive.  Simply speaking bad credit makes life and purchases very expensive!

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