Why Your Credit History Gets Damaged — and Do You Always Know About It?

The most obvious reason is failure to meet debt obligations — when a borrower does not repay borrowed funds. The presence of overdue unpaid debt leads to a default status, which effectively blocks access to new loans.

Another important factor is failure to adhere to the payment schedule. Even if a loan is eventually repaid, repeated delays reduce the level of trust in the borrower.

A less obvious — but still significant — factor that often leads to loan rejection is the level of credit burden (or over-indebtedness). A large number of active loans, or a total monthly payment amount that is high relative to income, signals that the borrower may struggle to handle additional debt.

Do people always know about these issues? In reality — no, not always.

Here are some common examples:

• Credit fraud: loans issued using lost or stolen documents.
• «Forgotten» balances: small debts (e.g., card maintenance fees) that grow over time into significant overdue amounts due to penalties.
• Unclosed accounts: the expiration or even loss of a card does not mean the credit agreement is closed. Such accounts may remain active for years — even without debt — creating unnecessary credit burden.

That’s why it’s important to stay proactive and regularly monitor your credit history.