In the past, bad credit only had an impact on what you could buy. For example, you weren’t going to get a luxury boat if you had bad credit, regardless of how much money you made. Why? Because creditors could see that it wasn’t something you actually needed. To creditors, if you couldn’t make the payment it wouldn’t be a big deal for you, but could be a costly recovery for them. In the past, you didn’t have to worry as much about bad credit affecting necessities like housing. Today, things are quite different and bad credit can cost you more than just being turned down when you apply. Bad credit can affect your life in many more ways than you are probably aware.
Utilities and Housing
Housing can be difficult to get if you have bad credit. In fact, it can be so difficult that you may have to make a large deposit on a rental that you can only get on a week-to-week lease. This prevents landlords from worrying about consumers using long-term leases to stay in a rental when you have no intention of paying. Utilities work in a similar manner, sometimes charging a deposit as much as three months in advance. If you have bad credit, you might find dealing with utilities and housing more difficult than someone with a clean credit report.
Bad Credit and Employment
Credit doesn’t just mean being able to manage your cash wisely. Those who review your credit take it as a sign of how responsible you are or aren’t. If you have bad credit, they may assume that you aren’t very responsible. In their eyes, this translates to the concept that you aren’t very reliable. Since the job market is stretched so thin, potential employers have the upper hand and can choose someone else for the job regardless of your professional qualifications and experience. This is especially true for employers who are willing to offer on the job training.
Increased Interest Rates
One of the biggest costs you’ll face as a result of bad credit is higher interest rates on loans and credit cards. Although you might be approved for credit, it could be at a rate that is so high you may never be able to pay down the balance. Plus, it’s unlikely with bad credit that you will ever be able to take advantage of special 0% promotions or offers that can end up saving you thousands of dollars in interest payments.
Bad credit can affect you negatively in a number of ways, not just in how much you pay for loans and credit. It’s important, especially when considering a move or a new job, that you consider how much of an effect your credit rating may have. If you are in a position where you are unable to get out of debt or repair your credit, contact our office immediately.
How has bad credit affected your opportunities and expenses? Let us know in the comments below.