9 Consequences of What Bad Credit Can Do to You

Your credit score is made up of data that represents your credit history. It analyzes how much credit you have versus how much you actually use; your credit repayments, and if you consistently put only the minimum payment, or if you are always paying it off. Your credit score is also determined by whether you have ever defaulted on credit repayments, or made payments that didn’t cover the minimum payment required.

All of this data is kept and analyzed on a regular basis, and your credit score changes accordingly. Those who pay off their payday loans quickly will not face any serious consequences, but the same cannot be said for those who delay their payments. Here are nine consequences on what bad credit can do to you:

1. Getting a loan or credit card

One of the most noticeable consequences of bad credit is that it can cause the refusal of your applications for loans or credit cards. When you’re struggling with finances, this may cause a lot of headaches as you try to sort things out without any wiggle room.

2. Buying a house

You will notice the consequences of what bad credit can do to you when buying a new house. Lenders see individuals with bad credit as risks, so mortgage lenders are especially cautious about handing out mortgages to individuals with a questionable credit history. Bad credit can halt your home buying dreams in its tracks, or can delay it significantly as lenders hum and haw over whether or not your request will be approved, or how much they are willing to approve you for.

Mortgage lenders may ultimately approve a mortgage for someone with a bad credit rating, but it could be a much lower mortgage than needed to buy the right home, or any home at all depending on the market.

3. Buying a car

Cars are not only expensive buys, they’re also terrible investments. Vehicles typically do not hold their value, meaning that lenders are very cautious about handing out the money for something that won’t retain its value, and which can easily be destroyed at any moment. Bad credit can also mean that if that car loan does come through, it has an interest rate that is through the roof.

4. Interest rates on loans

Any loan that is ultimately approved for someone with a bad credit score is likely going to have a ruthless interest rate. The only method lenders have to protect their investment, is to try to get as much money out of the borrower as possible.

5. Apartment rental

Many apartment rentals require a credit check before they will approve a renter. Landlords don’t have to wonder if rent is going to be on time if they know that their tenant is typically pretty good about making their payments. A good credit score shows diligence and consistency, while a bad credit score raises red flags.

6. Securing services

Sometimes when you want to secure a service, like a phone or internet plan, the company will check your credit score to ensure that you are able to make the monthly payments required to maintain the service. A bad credit score might raise the cost of your services, or could cause the company to deny your hookup. Alternatively, they may require that you have a co-signer to put their name on your account as collateral.

7. Blocked in an emergency

Life happens, and that is really what consumer loans and credit are there for. If your car breaks down, you lose your job, your house floods, or you need to make an emergency trip to visit a sick family member, you’ll need some cash on hand. All these things, and countless other unexpected occurrences could happen every day.

If one of these things happens and your credit score is low, it could be extremely difficult for you to gain access to enough funds to hold you over until you can straighten things out or get money from insurance. It can make an already difficult situation even more exhausting and impossible.

8. Credit scores explained

We’ve talked a lot about how a bad credit score can affect your life, but what exactly is a bad or a good credit score? Credit scores are represented on a scale that goes from 300 to 850. 300 is the very lowest your credit score can go, and anywhere between there and 629 is considered a bad credit score. 630 to 689 is fair, and if you’re in this range you’re doing okay, but there’s definitely room for improvement. You’re in a good spot if you’re between 690 and 719, and anything that lands at 720 or above is excellent.

9. Getting out

Your credit score is an ever-changing thing. Make some good moves and your credit score will go up, make some bad moves and it will go down. Speaking with a professional can help raise your credit score so you’re not caught in a tough spot when you’re just trying to live your life. There are many programs, loan types, and products that can get you on the right track.