n a world where credit is king, having bad credit can make things a lot more complex. Your credit status essentially determines your eligibility for financial products like mortgages, auto loans, and credit cards. It is an account of how well you manage your finances and a negative history would insinuate that you’re not that reliable. You may assume that having poor credit does nothing more than impact your ability to get a credit card or loan, but the truth is, it can have a lasting impact on your personal finances and future.
If you have bad credit and plan on applying for a mortgage or rental lease, don’t be surprised if you get shut down. Your credit history is used by mortgage lenders and landlords to determine your eligibility. If you cannot manage your personal finances, adding more debts like a mortgage or rental payment would be unwise. Therefore, you may get denied.
Limited Chances of Auto Loan Approvals
Getting around will be hard to do if you don’t have the cash upfront to purchase a ride. Auto lenders also review your credit to see if you’re eligible for a loan. Even if you’re fortunate enough to locate a car loan for bad credit, you’re going to pay a lot of money in interest and other associated feeds.
Higher Cost of Services
Loans and credit cards aren’t the only things that will be denied or cost a lot more to obtain, so are a lot of other services. One example would be your car insurance. Drivers with poor credit are likely to pay more in insurance in comparison to a driver with better credit. Another is paying deposits for cable services or utilities. If your credit is bad, you will be required to pay more out of pocket to offset the high-risk of service providers offering you a service.
What to Do?
Living with bad credit is expensive and stressful. If you’ve felt the impacts of poor credit such as those described above you should definitely make a plan to improve your credit history. Here is some advice:
- Pay down old debts – the oldest debts are doing the most harm to your credit history and need to be cleared up. You can try qualifying for an installment loan online to give you extra money to clear up your credit. You can use the loan balance to pay off an old debt to improve your score and repay the installment loan in more convenient payments.
- Remove inaccuracies – if you haven’t taken a look at your credit report in some time, you should. There could be information on your history that is inaccurate or outdated and needs to be removed. Make sure that all debts listed are, in fact, your own, and that all accounts are recorded up to date. If you find inaccuracies, you can always reach out to the individual credit bureaus to dispute it.
- Negotiate better terms – sometimes debts just get out of hand and you can’t afford to pay them back. Contact the lender to try and negotiate better terms. Perhaps reducing the interest rate, removing late fees, and creating a new repayment plan can help you start putting a dent in the debt faster.
Your credit is more valuable than you realize. Bad credit can hinder your abilities to get a new house, apartment, car, credit card, or loan. It can also make other services that you need and want more expensive. If you’re tired of the impact that negative credit is having on you. Use these tips and others to start paying off your debt and improving your credit score.