Consumer use of credit has steadily increased over the past decade.
Unfortunately, incomes have not kept pace with these growing levels of credit
related spending. This trend has resulted in record levels of personal
bankruptcies, as well as high levels of late payments, skipped payments and even
foreclosures. All of these factors have worked together to produce one very
negative effect: damaged credit. Tens of thousands of people across the country
are now being forced to deal with the consequences.
Most people simply do not realize how
important a solid credit rating can be until they no longer have it. This
realization is typically brought about by ramifications that begin to appear in
an individual’s life. Listed below are a few of these negative results.
- Credit or lending denial. A poor
credit rating significantly reduces the chance that an individual will be
approved for a credit card or loan. This can affect mortgages, car loans,
personal loans or lines of credit.
- High rates. If an individual with
damaged credit is approved for a card or loan, it is generally at a very high
rate of interest. Lenders view these individuals as “high risk” clients and
therefore they charge higher interest to offset that risk. Over the course of
a loan this can translate into hundreds or thousands of dollars.
- Insurance denial. Some life
insurance companies will turn down individual’s with bad credit.
Increased fees and charges. Lenders often tack on additional fees and charges
to bad credit borrowers.
- Difficulty obtaining a job. Some
employers will view a copy of an applicant’s credit report as part of the
screening process. A bad rating would seriously diminish a candidate’s chance
for receiving the position.
- Housing problems. Individuals who
have submitted a rental or leasing application for an apartment, condo, or
house will often be subjected to a credit search. Negative results often lead
to a rejection of the application.
- Anxiety. Many people who have poor
credit are scared of all the potentially harmful consequences. Additionally,
there is often a sense of deep guilt and remorse.
The consequences of bad credit can be
quite significant. They often affect an individual’s financial life, as well as,
employment and housing opportunities. If your credit habits are threatening to
damage your report, then the time to act is now! Do not wait until these
repercussions begin to appear before addressing the issue.
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