Bad credit or sometimes referred to as Non Performing Loans (NPL), is one of the diseases that can hamper the development of the financial services sector. Bad credit can be caused by various factors, both internal and external factors.
In general, the internal factors that cause the occurrence of bad credit are irregularities in the implementation of credit procedures, weaknesses in credit analysis, bad faith of owners, managers, or bank employees, improper credit provision, the desire of banks to earn large income, weak administrative systems , information systems and bad credit supervision.
While the external factors that cause the occurrence of bad credit in general are the failure of the debtor’s business, the disaster of the debtor or the business activities of the debtor, as well as the decline in economic activity and high credit interest rates.
As we know, a credit card is a card that can be used as a substitute for cash, with a system of debt, which must be paid according to the amount at maturity. Like other debts that can experience congestion, credit card debt is also one of the most frequent bottlenecks. In general, people use credit cards to make payments for consumer goods. Therefore, it is often used uncontrollably, resulting in the money to pay is not available at maturity.
Internal and external factors that cause customers to not be able to pay credit cards, causing bad credit, including the habit of consumptive owners, uncontrolled desires to buy goods that are beyond their purchasing power, bad faith from credit card owners, lack of planning, and disaster that happened to the credit card owner.
Mortgages (Housing Loans)
Mortgages have become commonplace for people who want to buy a house. The need for mortgages is very high considering the increase in house prices is not proportional to the increase in people’s income. Therefore, mortgages are one of the tools to help people buy houses by installments. But what is very unfortunate is that sometimes people forget that there are factors that can cause people to be unable to pay mortgage payments and cause bad credit.
Internal and external factors that caused customers to be unable to pay mortgages, including lack of planning when buying a house, lack of knowledge and calculation of interest payments, high mortgage rates, reduced economic growth in the community, employee cuts where KPR recipients work, absence of emergency funds which is reserved, and there are financial disasters that occur in KPR recipients.