Credit is a part of the life and financial situation of many people because nowadays a large majority of people have borrowed some of the many types of loans for a longer or shorter period. However, it is possible that if a person is currently borrowing a loan, then in the past she has had at least one or several credit obligations. If these credit commitments are well-paid and well done, then your credit history is definitely all right, but if you have missed a loan repayment in the past or don’t repay the loan for a long time, your credit history is probably not the best. And if the debtor has a bad credit history, is he still able to borrow a loan, especially an interest-free loan?
To answer this question, you first need to understand what a non -interest-bearing loan means in general and what a bad credit history really means, because only in this case is it possible to understand whether creditors will allow interest-free credit with bad credit history.
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Bad credit history means that the customer has somehow damaged his credit history, which in the future is a serious obstacle to new credit. Bad credit history is not only possible in a number of ways, but it also has a number of steps that all play a significant role in whether any creditor gives you any kind of credit.
Most often, bad credit history is obtained by the customer due to late repayment of the loan or simply without paying to the creditor the amount that was set when concluding the loan agreement. Most often, the loan repayment period is delayed by a couple of days, so even though it appears in your credit history, it will hardly affect the creditor’s decision, but if you have delayed the loan repayment for several weeks or months and the creditor sees you unable to repay the loan, this situation will severely undermine your credit history and future credit opportunities.
Credit history is usually broken down into three levels:
the first level is if the credit history has been damaged a long time ago, several years ago, but since then the debtor has repaid all his debts and his credit history has been good – in this case, the creditor would hardly have major problems in obtaining credit;
the second level is that the credit history has been damaged several years ago and since then the credit history of the customer has been good – even though such a credit history is not the most positive, even with such a credit history it is still possible to get credit if the bank considers your solvency and the recent credit history is good enough to be able to repay the loan;
the third level is when the credit history is spoiled for quite a while, and just as soon as the credit is repaid or you are still repaying it – in such a situation, almost all creditors, most often taken out of the collateral, refuse to give the loan to the client, because if it has recently had difficulty repaying the loan, then it is likely that the client will have these difficulties.
What is an interest-free loan?
Non-interest-bearing credit is a type of credit where the creditor gives the debtor a credit of 0% per annum, which means that the borrower must repay only the amount he borrowed from the creditor without paying any additional interest. For example, if the debtor borrows € 500, then the € 500 debtor must also be repaid within the agreed maturity.
Most often, creditors use non-interest-bearing loans as a marketing trick to attract new customers, as interest-free loans can usually only be borrowed as a customer’s first credit to each individual creditor. When this loan is repaid, the next time you borrow at the same creditor is no longer available an interest-free loan, but the debtor has the opportunity to borrow only the loan with the interest rate set by the creditor. Creditors offer interest-free loans only as a customer for the first credits, and also for the most common amounts because such credits are very disadvantageous for the creditor. Creditors earn their profits directly from the interest paid by the debtor, but if the debtor does not pay the interest, the creditor will only benefit the new customer without any profit.