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19-03-2020

Bad Consequences of Bad Credit

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Financial Blog

Bad Credit can be a big concern for those who actively participate in financial affairs, as it creates a bad “reputation”. More often, it affects those who want to take a loan, but everyone else who doesn’t need any loan products should not think they won’t experience the bad consequences. Let’s figure out how your poor credit score can affect your lifestyle in the following passages.

1. Rejected Loan Requests

Most of us need some kind of loan product at some points in our lives. Whether you intend to use the loan for getting a new house, a new car or taking care of your personal, medical or educational expenses, getting approval with bad credit will be hard, if not impossible. Lenders these days are much pickier about who they will lend money to and those with consistent bad credit scores and histories will not be high on their approval list.

2. Higher Interest Rates for Bad Credit Holders

It used to be almost impossible for customers with bad credit to get a loan and take care of their financial needs. A mistake once made could be crucial with no opportunity to correct it. However, over time these rules and requirements became less strict. There are various companies and institutions that suggest loan products for bad credit score holders as well, and it sounds so tempting.

Everyone whose credit score leaves to wish for more should realize that they can’t be accepted as customers with good or excellent credit are. There will always be this “discrimination”, no matter how much the lending system gets modernized.

Advice: Be realistic and expect to pay more fees and higher interests if you have decided to go for loans. Also, do your best to improve your credit score status to a better one.

3. Fewer job opportunities

This statement doesn’t mean that your credit score will be hard checked if you want a job as an assistant at the local shop. However, those planning to get a post at the government or other state organizations should be aware that their bad credit score may decrease their chances of getting the job.

4. Difficult-to-get Cell Phone Contracts

As we have already mentioned, bad credit customers are considered ‘risky’ and cell phone companies are not an exception. Your impaired credit may be a reason to reject your request for a contract. However, if you do manage to open an account, you will most likely be requested to pay deposits.

5. Can’t Meet Rental Requirements

Landlords, like potential employers, run credit checks to see how responsible and reliable a new tenant will be. A track record of late payments may send a red flag to the landlord that rent may never be on time. As a result, a landlord may not agree to allow you to rent out a home or an apartment no matter how much money you currently make.

6. Must Pay Out More Deposits

Like cell phone companies, most service providers will require a hefty deposit before services can be established. Electric companies, phone companies, cable providers, and other utilities may not agree to activate services without an upfront deposit of cash. That cash would likely need to remain on file for 6 months to a year until the consumer can establish reliability in on-time payments each month. Sometimes the deposit may be kept until the account is terminated!

7. Fewer Opportunities to Get Credit Cards

A great number of people choose to take new credit cards to improve their FICO assessment, however, it may not always work. With a bad credit score, it may be difficult to impossible to get new opportunities with the banks.

Advice: Remember, sometimes a bad credit score is just a result of bad financial management, and just adding more cards will make everything even more complicated. Instead of trying the impossible just undertake some practical steps for better income-outcome management and this will pay itself off in the long run.

8. Bottom Line

You may have come across many advertisements of companies claiming your bad credit is OK, but they usually suggest their financial services with extremely high-interest rates. If we add short repayment terms to this feature, the result may be a worse financial situation, and even falling into a debt cycle.

Apparently, you will only have disadvantages and bad financial experiences because of your defective credit score. The best advice? Stay away from the situations leading to a lower credit score. If it seems impossible, try to improve it by making wise decisions and move towards having more opportunities.

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Written by author-twitter Jodie Adams

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