Answer
Companies notify credit agencies when individuals do not pay their bills on time. Creditors communicate the borrower’s payment history and borrowing habits to these agencies. Credit agencies gather and analyze data regarding debts and payments, assigning a credit score based on this information. This score reflects the borrower’s creditworthiness and helps other lenders decide on loan approvals. A failure to meet payment deadlines typically results in a lower credit score, leading lenders to deny future loan applications due to concerns about the applicant’s reliability in repaying debts.
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