The Sins of the Past: 4 Surprising Ways Bad Credit Can Hurt You in the Financial Sense
There can often be consequences down the road when you take a wrong turn with your finances and decisions you take at the time can impact your future when mistakes from your past are there for all to see on your credit file.
Here is a look at some of the ways that poor credit history can inflict some unwelcome financial damage and what you might be able to do to put the record straight and improve your file reads.
Restricting your mobility
If you have a credit card you take it for granted how easy it is to pay for things and get around with relative ease.
Making travel plans such as booking airline tickets becomes infinitely harder when you don’t have a credit card because of bad credit.
Having to pay cash and having no access to a source of money on credit when you need it is very restricting and poor credit can prevent you from doing all sorts of things, including, maybe even owning a car or at least getting the best deals on insurance if you have to pay upfront.
There are alternative loans for bad credit customers that could help you in a fix, but it is clear that if you have a poor credit score it could definitely restrict your mobility.
You might get a nasty surprise with your property insurance quote
It should be noted that there are a number of insurance companies who take the view that there is a definite link between bad credit and high insurance claims being filed.
Whether there is any justification for taking that blinkered view becomes irrelevant to you if you find that your property insurance quote is much higher than you expected because the company checked your credit file and didn’t like what it saw.
The practice of inflicting higher insurance premiums on customers with bad credit is actually not allowed in a few states, which highlights that this is a genuine problem, but if you live somewhere where this goes on you could find yourself paying twice as much as a person with an excellent credit score.
A struggle to get a new mortgage deal
If you took out a mortgage when your credit score was good and your financial standing has worsened since then you could find yourself stuck with the deal you already have and unable to remortgage or get a new loan altogether.
The financial crisis affected lenders in a big way and that meant tighter borrowing rules for everyone. It also means that if you have bad credit your ability to get a mortgage deal might mean that your options for moving or refinancing are badly limited.
Denied a job opportunity
There are a number of employers who access your credit file as part of the vetting process and that means you could be overlooked for a job that you are qualified to do because of bad credit.
It is estimated that about 10% of people are denied an offer of employment because of bad credit.
Debt and bad credit can prevent you from moving forward with your life but there are ways to improve your score and if you take steps to improve your creditworthiness by paying down your loans as quickly as possible, it won’t always be a case of lenders saying no to your loan request.