Having Bad Credit Can Cause a Lot of Trouble For You

Having good credit means a lot of things to a lot of people. The positives are numerous and self explanatory. Granted, they bring with them payments, interest rates and a need for effective management. The question arises as to what having bad credit means to the consumer and this is a many faceted situation.

Lenders and credit card companies use what is called a FICO score to decide if you are eligible for any kind of financing. A score which is 720 or above is considered to be excellent and will enable you to qualify for nearly any kind of loan you request. A score of 650 or lower is when you may begin to face difficulty.

Who decides your FICO score? This is done by the “big three” credit reporting bureaus, Transunion, Equifax and Experian.

Financing opportunities A less than satisfactory FICO score will make it tough for you to get financing. You may have a very hard time getting a mortgage, car loan or personal loan. Having a bad credit history tells prospective lenders that you are a high risk for a loan or that you might not be able to repay a loan in a timely manner.

Interest rates The hardest part of having a bad credit history is the much higher interest rates you will pay.

The FICO score is also used to determine the interest rate you will be eligible for. A good score can get you in the door at a relatively low rate like 7% or 9%. You may be able to get financing but will pay a much higher interest rate as a result.

I once faced a situation where I was trying to get a consolidation loan. My credit score was not as good as it should have been and as a result, I would have been paying an interest rate of 24.99%! This is a very high interest rate, $25 for every $100 of outstanding balance each year, or $250 on my balance of $1,000!

Personal health and well being The financial ramifications of having bad credit are bad enough, but there are other things to consider. If you have bead credit, you are probably already in debt. You may be getting mail from creditors or even harassing phone calls from collectors. This creates stress and strain on even the hardiest of people.

You might have trouble sleeping, depression, loss of appetite or any of a number of other stress related symptoms. All of this because of some money troubles. While your finances are indeed important, so is your physical health.

Conclusion Having bad credit can hold you back in almost every aspect of your life. Buying a home, getting loans for college expenses; whatever it is -it may be a struggle to get financing. We all want to have something nice for ourselves, but having bad credit can keep you from being able to.

Bad credit can even take a toll on your health and cause you many problems. High blood pressure and even heart attacks are not unheard of; so be careful with your credit and take care of it - you’ll be glad you did.

About the Author:

Steven J. Talrechi has been studying credit reporting and credit reporting practices for 12 years. He is an expert in helping others with second chance banking and obtaining a checking account when they have been turned down by banks.