Consumer Law

How Bad Credit Affects You

By M. Stan Herring

MyCreditGroup.com has posted a very helpful article that discusses how having bad credit has a negative impact on your financial well being and credit report. Having bad credit can send you into serious debt in the long and short terms unless you look into some options for credit repair.

Here is a list of just a few of the negative effects caused from bad credit:

- Your loan application could be denied. If your credit score is lower than the average, lenders will see you as too risky to lend money to. Your credit score will make it look like you won't be as likely to pay back the loan as someone with an average credit score. Some lenders might not offer you any line of credit at all.

- Creditors and lenders, specifically the ones behind credit cards, view your bad credit with skepticism and will slap you with high interest rates. The interest rates can actually be so high that you end up only paying half of it off on your monthly payment and aren't paying any of the actual debt at all.

- Your insurance company also checks your credit score, meaning you will have higher premiums. Higher premiums are directly related to low credit scores.

- If your bad credit is because of overdue bills, the only thing that can help is paying your bills off. A No Call list only applies to solicitors and won't do any good if you're dealing with debt collectors. The only solution is to pay the bills.

- A bad credit score will very likely affect your apartment hunting. If your credit is low, the landlord is likely to not approve your application until you fix the problem. Or if you do get the apartment it won't be for as good a rate as someone with good credit would receive.

- Buying a new car is very difficult if you have bad credit. Lenders will see you as very high risk and will be quite reluctant to give you a loan for a new car. Those "No Credit, No Problem" advertisements are too good to be true. They might not check your credit score, but the interest rate will be sky high.

- You can actually be denied employment because of a bad credit score. With the unemployment rate being so high, employers can afford to be very picky about who they hire and credit scores are often a deciding factor. In this economy, you don't need to be turned down for a job you're qualified for because of bad credit. Do something to fix the problem!

If you have had problems with debt collector harassment or credit reporting errors and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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Full post as published by Alabama Consumer Blog on September 23, 2010 (boomark / email).