Having good credit is extremely important, and for those that have good credit many doors open easily for them. But those that suffer from a bad credit score will find difficulty in securing funding.
Bad Credit Usually Means Higher Risk to Lenders
If you have bad credit, for the most part it means to lenders that you are at high risk of not being able to pay back a loan. In many cases, banks will still give you a loan, but the interest rate you pay for it will be much higher than a person with good credit. If the loan is for a home, you can literally pay tens of thousands of dollars more over the life of the mortgage due to your bad credit rating. The same is true with credit cards or car loans. Having a bad credit rating usually means that your chances of being approved are usually less and the amount of interest you need to pay is usually more.
Bad Credit Can Stop You from Being Employed
Today, many employers not only require a resume, but also require you to allow them to review your credit report.
Some industries such as retail look at a person’s credit report to determine if you are at a higher risk of stealing merchandise.
While most job seekers think this is highly unfair, it is legal and many retail and other types of positions continue to request a credit report as a pre qualify.
Bad Credit Can make it More Difficult to Rent an Apartment
If you have bad credit, you may realize that it is much more difficult to find an apartment. Apartment managers and landlords want trouble free landlords. This usually means that they would like their tenants to have average or good credit scores. If you have bad credit the landlord or apartment manager may not allow you to rent the apartment.
Avoiding Bad Credit Pitfalls
While in most cases it can take a coupe of years to repair your credit, you should start repairing your credit as soon as possible. This means requesting your credit report and viewing your negative remarks. In addition, if you have any unpaid debt you should come up with a payment plan to quickly pay it off. This may require creating a budget, taking on a second job, consolidating your credit card debt, etc.