10 Effects of Bad Credit

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Most people assume that bad credit is a negative thing; however, few really understand exactly how dangerous it can be. From your cell phone to your security deposit, your credit report literally affects every aspect of your life. Here are ten areas to consider as you consider your credit score.

  1. Apartment rental. Before offering a lease to clients, apartment complexes run credit checks. If your credit score is low, there is a good possibility that you will not be offered a lease.
  2. Security Deposits. If a lease is offered to a “high risk” credit customer, it will likely be conditional on a hefty deposit (for security in case you default). Utility companies do this, as well, if you credit report comes back poor.
  3. Cell Phone Contracts. Want that iPhone? Not likely to happen if you have debt collectors knocking on your door. Cell phone companies will not give you a contract if your credit is horrible. Or again, they might offer you one on the condition of a huge deposit.
  4. Loan qualification. Whether a car loan, college loan, or mortgage, if your credit report is poor, it may be difficult to acquire one. Banks and Credit Union are leery of customers with a bad financial history. They will consider you a risk.
  5. Interest rates. A bad credit score can also mean higher interest rates, if you are able to acquire a loan. High rates cause the length of time on your loan (and the amount of money you end up paying) to increase astronomically.
  6. Car Payments. Car companies may be hesitant to sell you a car, as well. If they do sell you one, the payments may be higher than what they would be otherwise.
  7. Insurance. Once you have the perfect car, you want the perfect insurance, right? Well, if you have bad credit, prepare your pocketbook for vastly higher premiums to keep your car on the road.
  8. Credit Card approval. Would you want to loan money to someone with a history of not paying their bills? Likely not. Credit Card companies look at credit reports, and if they don’t like what they see they won’t offer you a card (or they may just slam you with an astronomical interest rate).
  9. Employment. Many companies, especially financial ones, consider potential employees’ credit reports before hiring. Bosses want financially savvy people working for them. If your credit score says otherwise, you run the risk of not getting the job.
  10. Debt Collectors. Prepare yourself for a major loss of cell minutes due to the phone calls of debt collectors if your credit score is low. This is just a normal part of life when you don’t make your payments.

So how can one little number affect so many aspects of your life? Perhaps it is because your credit information is freely available to nearly any authority. And just about every financial decision that you make affects your report. So the next time you consider making a late payment, remember that there may be long-term consequences.

Learn More: Steps to improve your Credit.


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