What is the consequence of a BAD credit rating?

I'm sure that most people are aware of the term: 'Bad Credit History' and it's also referred to as, sub-prime credit history, impaired credit history, poor credit history, and adverse credit history. All are basically a negative credit rating. A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purposes of loaning money or capital.

Reasons

An individual or business' credit history are regularly monitored by credit rating agencies. The data reported by these agencies is normally provided to them by creditors and includes detailed records of the current and past relationship a person or business has with the lender. Detailed account information, including payment history, credit limits, high and low balances, and any aggressive actions taken to recover overdue amounts, are all reported regularly, usually monthly to the agency. To make it easy for lenders to make instant decisions, credit scoring was invented.

Lending money to a person or company is always a risk; credit scoring offers a standardized approach for lenders to assess that risk rapidly and "without prejudice."

Credit scores allege to assess the likelihood that a borrower will repay a loan or other credit obligation. The theory is, the higher the score, the better the credit history and the higher the probability that the loan will be repaid on time; this theory purports. When creditors report an excessive number of late payments, or trouble with collecting payments, a "hit" on the score is suffered. Similarly, when adverse judgments and collection agency activity are reported, even bigger "hits" on this score are suffered. Repeated hits can lower the score and trigger what is called a negative credit rating or adverse credit history.

Something to note is, when a lender requests a credit score, it can cause a small drop in the credit score.

Consequences

The consequence of a negative credit rating is typically a reduction in the likelihood that a lender will approve an application for credit under favorable terms, if at all. Although in these ‘credit crunch’ times, I can imagine that everyone may feel they are in this category. Interest rates on loans are significantly affected by credit history—the higher the credit rating, the lower the interest, while the lower the credit rating, the higher the interest. The increased interest is used to offset the higher rate of default within the low credit rating group of individuals.

In the United States, in certain cases, insurance, housing, and employment can also be denied based on a negative credit rating.