Six Ways Bad Credit Can Damage your Life
Posted by Jo on September 1st, 2015
Bad Credit – The Consequences.
For good or bad, much of modern households, get by thanks to credit. It’s how millions of people can take family trips and fun vacations. It’s how young families put their roots, buying their new dream house. It’s the most common way for people to pay for their education and gain some advantage in life. All these options are available to many people with the magic of credit. Needless to elaborate over the need of having a good credit score in order to have these options available to you. We all know how a good credit score can help in life. In this article the main focus is diverted towards bad credit and the implications it can have on ones life.
Bad credit happens, it can happen to me, it can happen to you, it can happen to anyone. Your credit score, basically, is a report card of your financial health. Lenders will look at your credit report when you borrow money. Banks use credit score to determine what kind of a customer you are. It helps lenders calculate the risk of, well giving you money. If your credit score is low, you may find yourself paying large deposits / down payments and higher interest rates etc. Most cases of bad credit score, are the result of poor financial management or hardships. However in some cases a bad credit score can happen due to the courtesy of an identity theft. Although there is much to be said about this method and its “fairness”, nevertheless its here and it affects the lives of millions.
We’ve compiled a list of some of the things that a bad credit score will affect.
- Mortgage Loans. When trying to buy a home, most of us will apply for a loan or a mortgage. During this process, banks will review and assess your credit score. If you have a bad credit history, then it is most likely that you will not get a approved for a mortgage or high interest rates will apply.
- Car Insurance. Most of the time, insurance companies will check your credit score, before providing a quote. This means that your credit score will directly effect your insurance’s, monthly premium. Causing you to pay, higher than average rates for years, (assuming you got approved in the first place by an insurance company).
- Credit Cards. When you are approved for a credit card you may have higher interest rates than the average. Usually the “Good Credit Cards” will have low interest rates and benefits while the “Bad Credit Cards” will have high interest rates and many fees. Needless to say which credit score will get you, which cards…
- Car Loans. If you try to get a loan for a car while having bad credit history then just like a house loan, the banks will check your credit before approving your purchase. Interest rates and monthly payments will be higher then usual (assuming you can even qualify for a loan).
- Cell phone plans. The bigger cell phone companies usually check your credit score to see if see what plans you can qualify for. With a bad credit score, not only you will pay more but you can be denied of certain services and products.
- Future Job. Under the fair credit reporting act it is legal for your future employer to review your credit report with your consent. However, some states have laws that limit the use of such information in the hiring process.
This short list, as gray as it is, reflects the reality we live in. The list above should not be your wish list but instead it should be your to do list. Its true that sometimes certain situation in life deems our financial situation and there is nothing that we can do about it. However for all other things, you should take control. Get a detailed credit report and see what stalls your credit score. You can even get a free credit score check and get a glance at your financial situation. Build or rebuild your credit score and start adopting healthy spending habits. Learn about secured credit cards and how they can help you reestablish your credit score. Talk to the companies that you owe money to, try to reach a settlement (will not always help better to use a professional). And remember that even if your credit score is bad now, it will clear up by itself within a few years so there is still hope and need to make the right financial decisions.
If you feel that bad credit is ruining your life or if you find this article related to you in any way, please feel free to leave a comment bellow. You can tell us what you think, you can share your personal experiences or you can ask for a personal advice. We are here to help, Credit Monarch is your number one credit cards experts.