Having a bad credit score can cause all sorts of problems which you may not be aware of. By doing the wrong things, you’ll be making your credit score even worse. If you let it get out of hand, repairing it is going to be almost impossible. So, we’ve put together a handy guide of what you need to know about bad credit. We’re detailing the downsides you can expect to encounter, and how you can avoid them.
How A Bad Credit Score Affects You
It’s easy to let your credit score get into a bad state if you don’t really know how it’ll affect you. Failing to make payments on time will ruin your credit rating, and you’ll lose out on opportunities as a result. Let’s go through some of these now.
Firstly, if you ever intend to take out a loan of any sort, you’re going to struggle. Loans are based on credit ratings, meaning that you need your credit score to be adequate in order to get one. If it isn’t, the only loans you’re going to be eligible for are ones with high interest rates. You don’t want to be getting involved in this sort of practice if you can help it.
This extends into insurance policies too. If you’re trying to get insurance for something like a house or a car, you might not be able to get the best deal. The company will see you as a liability and refuse to give you the insurance policy. Alternatively, you might just have to pay a vast amount of money to get it, instead.
Did you know that you could actually lose out on a job because of your credit score? Some employers check your credit report. Most companies are looking for items that could affect your employment, rather than your credit score itself. You don’t want to lose out on that dream job because of a poor credit rating.
Even something as a simple as a phone contract can be difficult to get with a poor credit score. Contract providers aren’t going to trust you to pay back the money if your reputation has been damaged. There aren’t many ways around this unless you’re willing to pay cold hard cash for the phone you really want.
Those are just a few examples of the ways bad credit can affect your everyday life. As you can tell, it’s a serious problem for those who suffer with it.
How To Solve The Problem
The best thing you can do to solve a bad credit score is to make payments on time. Of course, that’s not always possible, and your credit score will suffer as a result. Once this is the case, there are still options you can try to repair it. If you can get approved for a credit card or small contract, make sure you pay it back on time. There are also credit repair services out there that can try and improve your score.
But what happens if you’re getting declined for things when you’ve done nothing wrong? In this case, there could be any number of factors coming into play. Get a copy of your credit report and analyse it for any mistakes. If you want to dispute anything on there, you’ll probably need to send credit repair letters to the relevant agency. You should check for anything that looks strange, like identify theft or outstanding payments that you know you have already paid.
Failed payments will sit on your credit report for up to seven years, so it’s going to be difficult to turn the situation around quickly. You still need to put the procedure in place, though, so you can buy houses and take out loans in the future. However, don’t be tempted to apply for too many applications for loans and contracts right now. Every time you fail, your credit score declines slightly. If you’re too trigger-happy with trying to take out new contracts, you could find yourself in even more trouble.
It’s fairly obvious to see that having a bad credit score can be incredibly detrimental in so many key areas. It will affect your life considerably, so you must do what you can to make sure it’s in good health. In future years, when you’re ready to start a family and have children, the ability to buy a house is incredibly beneficial. Additionally, taking out loans to start a new business is only possible with a good rating. You’ll find many situations where your credit rating is called upon, so make sure it’s up to scratch.