How Having Bad Credit Can Cost You More Than You Think
Having bad credit can cost you more than just higher interest charges. It can add significantly to your stress levels, reduce financing options and leave you with limited borrowing options when the need arises. Before your bad credit gets completely out of control, here are a few things to think about if you decide to ignore the situation and not try to remedy it.
When you get behind on credit card payments or home loans, the amount of fees that you will be charged can be a killer when added onto an already bad situation. Higher interest, paying late charges, repossession fees, over-limit costs and penalty fees can all be added to your delinquent account. This can add up to hundreds or thousands of dollars in costs on top of the original amount that you owe.
When your credit score goes down to the lower levels, you will find that any finance options you seek out will have higher interest rates than you have paid in the past. This is because you are now classed as a high-risk borrower and you are not trusted to pay the money back. Another thing that you may not be aware of is the universal default policy. In simple terms this means that if you default on one loan, all other lenders may begin to charge you their default terms despite you still paying them on time. While this may seem unfair, they are within their rights to do so if it is written into the terms and conditions of their contract with you.
You could end up losing out on a dream job simply because you have a bad credit rating. It is now quite common that a credit check is performed on people when they are short-listed for a job opportunity. A lot of companies deduce that the way you handle your finances is an accurate reflection on how you are as a person. Thus, a bad credit rating could lead to negative connotations being presumed about your character and you may be overlooked for that position in favor of someone who has cleaner credit.
If you have bad credit then you are going to have issues getting credit in the future, if you can get it at all. This is particularly true when the economy is tight and lending is limited. Those with good credit ratings are more likely to receive loans or credit lines applied for above those that have a poor history.
The moment you discover that you are going to be struggling to meet your financial commitments you MUST contact the lender. The faster you can make alternative arrangements to cover your payments, the less likely you are to incur massive penalty charges which can add up to large amounts. You need to ensure that your credit score is given forethought and priority at all times if you wish to be financially successful in the years ahead. Put your bills first ahead of entertainment and other non-necessities so that they are always paid on time. This way you will always have a high credit score that you can be proud of and this will well and truly pay off for you in the long run.
