Having bad credit can make a real impact on your everyday life. But a bad credit score due to your missed credit card payments doesn’t just mean you’ll have the shame of a low score. It has other more far reaching affects. Here are the top five ways that having bad credit hurts you.
1. Interest Rates
In spite of having bad credit, it still may be possible to get a loan for a car or a mortgage for a house. One reason for this is because there’s collateral. If you don’t make your payments called a foreclosure after they take your property away. However your interest rate will be very high since you’ll be considered a risky investment. Just a one percent increase in interest rate can translate into thousands of dollars more you’ll pay on your loan.
2. High Down Payments
When you’re going to buy a house or a car you’ll need to put down a large down payment if you have bad credit. Say you want to buy a $10,000 car. You might have to fork down half of the amount up front if you have bad credit, then get a high interest loan on the rest of it. This is especially difficult to do if money is tight.
3. No Access To Money
When you’re in a bind and need some cash you may be shut out if you have bad credit. You could have an emergency or an unexpected expense and need some fast cash. With bad credit your odds of being lent money is slim to none. This lack of access to funds can really put you in a bind right when you need it the most.
An unexpected way you can be impacted by bad credit is relating to employment. Employers have been known to check your credit score when you apply for a job. For most jobs, this does not happen, but for jobs in banking or for high level positions, it is possible. If you have bad credit you can even find yourself out of your current job. Your boss might do a routine check on their current employees’ credit scores. If anyone is found to have a very low score they could get the axe next. The reason being that you would theoretically be a higher risk to steal from the company.
5. Increased Stress
When you have bad credit it eats away at you. It leads to increased stress because you can no longer live the life you’ve always wanted to live. Bad credit creates problems in your relationship – with one partner blaming the other. There are calls and letters from debt collectors which only serve as a reminder of your dire situation. Then there is the constant fear of using your credit card at the store – for fear of it being rejected in front of others.