Bad Credit: Its Impact on Your Life and Solutions for Getting By

Bad credit can increase interest ratesToday’s average consumer relies heavily on credit to make transactions. Companies utilize information from your credit history to determine whether you’re a responsible spender. While many consumers are aware of the importance of maintaining a good credit score, most don’t realize how much of an impact it has on them, until they need to use it. Bad credit sends a message that you’re unreliable and companies looking to learn more about you and your habits probably aren’t willing to take a risk.

How Bad Credit REALLY Impacts Your Life

Some might believe that credit is only necessary when you need to buy a house or a car, but that is far from the truth. Your credit score and history are used in various areas of your life including some of these described below (some of these can vary from state to state, so check your local rules):


  • Bad credit can increase interest rates – Whether you apply for a credit card, mortgage, or car loan, your credit history will determine how much you pay back in interest. The worse your score is, the more money you have to pay for things like car insurance, mortgage payments, homeowner’s insurance, and more.
  • Bad credit can determine where you live – Those who are trying to apply for a mortgage or a place to rent might be surprised to find that their bad credit gets their application rejected.
  • Bad credit can get you denied for a job – A growing trend in human resources is looking at the credit history of job applicants. A messy history could result in you missing out on a job opportunity.
  • Bad credit can prevent you from having utilities – Many utility companies do a credit check prior to setting up services. Bad credit could mean they are not willing to provide you with services or at the very least you’ll have to pay a large deposit because you’re deemed high risk.
  • Bad credit can prevent you from being happy – When you’re stressed from the impact of having poor credit, it can become stressful which decreases the quality of your life.

Options for Bad Credit

For those with bad credit, rebuilding it will take time. Are there solutions that you can use in the meantime? Although not many, there are financial resources available to you that can get you out of a jam until you’ve rebuilt your credit:

  • Installment loans – Online installment loans are designed for consumers who have less than stellar credit. Approved applicants can receive up to $1250 in their checking account to use for small financial emergencies.
  • Higher down payments – If you’re trying to obtain a traditional loan with no credit or bad credit, you can consider offering to pay a higher deposit. This will reduce the amount you need to borrow and may persuade service providers to extend financing options to you.
  • Secure Credit Cards – Secure credit cards can help you to kill two birds with one stone. Secure credit cards are credit card offers for those with bad credit. For extending a small line of credit to you, you will be required to make an initial deposit upfront. These funds are added to the card and it can be used like a traditional credit card. They will report to the credit bureaus improving your credit over time.

Quick Tips for Rebuilding Credit

Now that you realize how much of an impact bad credit can have on your life you should start making a plan to rebuild it. Here are some suggestions:

  1. Contact credit card companies and negotiate repayment plan
  2. Get old accounts and inaccurate ratings off your credit history
  3. Put all your extra money towards getting out of debt (maybe even sell some things or take on a part-time job to pay them down quicker)
  4. Make timely payments
  5. Don’t open or close any accounts (length of credit has an impact on your score)

Credit is almost just as valuable as having money in the bank. If your credit is...a bit tarnished, it is imperative to start making the steps to improve it. Failure to do so, as you can see from above, can gravely impact your finances and ultimately your quality of life. If your debt has become overwhelming and you need additional assistance, seek help from a financial advisor or debt relief services to try and get a hold of your finances.




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