Effects of Having Bad Credit

HOW HAVING A DAMAGED CREDIT HISTORY IMPACTS YOUR LIFE

Having poor credit will result in you paying higher interest rates for credit cards and mortgages. Featured below are more examples of how having a low FICO score affects payment costs and your ability to obtain credit approval. Learn more about what is a FICO score and how credit scores are computed.

Car insurance
It has become common practice for auto insurance companies to base premiums on your credit scores. In addition, many companies will continue to check your credit every year of policy renewal! Those with bad credit can expect to pay anywhere between 20-30 percent more for their coverage than consumers with good credit.

Personal loans
People with poor credit are going to pay higher loan interest when looking to achieve unsecured financing. On average, people with bad credit are going to pay between 17-26% for a personal loan, while those with good credit will enjoy rates from 5-8%. This can be a difference of several hundred dollars/month! Understanding personal loan interest rates is important!

Job
Over 70% of major companies will check your credit profile when determining whether or not to grant you employment. In fact, having excessive debt upon graduation can have more of an impact of your chances of obtaining a job than the honors you received while in school.

The concern hiring companies have is that your credit issues are going to affect your production at work. Also, having bad credit is looked at as a sign of irresponsibility, which can obviously translate into the same at work.

Housing
It is very common for rental property owners to reject potential tenant applications with bad credit scores.

Utilities
Believe it or not, utility companies care about your credit score! If you have bad credit you can expect to have to pay a hefty deposit when opening your account and/or you may be required to have a co-signer.

Cell phones
If you have good credit, you are likely going to get a better plan, with better prices, than someone with poor credit. With bad credit, you may be denied for a regular contract and be required to utilize a pay-as-you-go agreement.

Elective medical procedures
If you are thinking about getting an elective medical procedure, be prepared to have your credit checked. Doctors want to determine beforehand if you are eligible for their payment plan. If you exhibit a bad credit history, you are likely going to have to remit payment in full at the conclusion of the surgery.

School loans
School financing is black and white. You either qualify, or you don't. Bad credit does not mean higher interest rates. It means you are not going to get approved.

Marriage
Many consumers are under the impression that if you have poor credit, and marry someone with good credit, that the bad credit gets wiped out. Not true! Your bad credit does not disappear. In fact, if your spouse is the primary name on your mortgage, and they die, you will need to qualify for credit in order to take over the home loan.

In conclusion....
Having poor credit effects you more ways than one. However, there are things you can do to improve your score and rating quickly and hassle free.

We also suggest you get a copy of your credit report once a year so that you are certain the information being reported is accurate. If it is not, you will need to take steps to correcting your credit report.

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