How Bad Credit Can Impact Your Life
We touched on the effects of bad credit in a previous article and how selling your home can be a great alternative to avoid foreclosure and bad in general; however, this week we would like to discuss the actual negative impacts bad credit can have on your life and why you should avoid getting bad credit at all costs.
Having Bad Credit Can Negatively Impact Future Interest Rates
Did you know that if you’re credit score gets too low or if you file bankruptcy, then it becomes extremely difficult for you to obtain a loan in the future? It’s true, and even if you manage to find a creditor to grant you a loan, well that doesn’t mean you will actually want to take the offer either. These creditors know that they are usually a last ditch effort and many people trying to rebuild their credit have no choice but to take them up on their high interest rate offers.
Yes, some creditors will end up praying on people with bad credit because they know these people are trying very hard to rebuild their credit and will do anything to do so. That being said, guess what these creditors do? Yes, as we said before, if they decide to offer you a loan, then that loan usually comes with an insanely high interest rate.
These interest rates are sometimes 4 to 5 times higher than what you were used to getting when you had good credit, but that’s one of the first bad side effects of bad credit, and unfortunately, it isn’t the last.
You Might Not Be Able to Find Employment
When you have bad credit you might think your financial world is in ruin, but in reality, that might be the least of your problems. If you get fired from your job or if you think are about switching jobs, you might want to think twice before making the leap. This is because many employers in today’s world will actually run a credit check on you before they even decide to hire you.
No, we’re not kidding either. Many employers, especially in the finance industry, believe that lots of outstanding debt or bills can actually make would be employees have poor performance on the job. Very strange, right?
Your Insurance Might Go Up
This is another very strange fact, but true, nonetheless. If you have life insurance, car insurance, or home insurance, well you might see your insurance premiums skyrocket if your insurance company finds out you have bad credit. Many insurance companies say that people with bad credit have more claims. However, I don’t know how much I really believe this one, but for some reason, the insurance companies do, so be prepared!
Thinking About Starting a Business With Bad Credit? Think Again!
If you have bad credit and you want to start a business, well it probably isn’t advisable until you have taken care of your debts and raised your credit score a bit. This is because most businesses have startup costs and require some sort of outside funding from investors or banks to get on their feet or open shop. You could have the best business idea in the world, but if you have poor credit, then you probably won’t get approved for a loan in the first place, and if you do, you can expect to have extremely high interest rates just like we talked about earlier.
Banks and financial institutions simply don’t trust people who have negative marks on their credit and it’s usually for good reason. However, we know that some people actually go through truly hard times, but many people who end up in this situation usually end up here because they spend way beyond their means and haven’t learned to budget their money appropriately.