Before a lender agrees to forward any funds to a potential borrower, they will want to look at the credit history of the borrower. All the lender is looking for is assurance that the money they lend out is safe and will be repaid on time, as agreed upon. The term "Bad credit" gets tagged on to an individual when that individual fails to meet his or her payment obligations (i.e. defaults) on the loan from a lender. This tag stays with the individual's credit history for 7 to 10 years depending on the type of default.