We all know about the consequences of bad credit. You cannot get a credit card and you have to pay higher rates on your mortgage. If those are not good enough reasons to repair your bad credit rating, we are going to give you some more. Bad credit can hurt you in a number of surprising ways. These are some of the main ones.
A Lack of Mobility
When Hurricane Katrina destroyed New Orleans, many people suffered simply because they could not escape the destruction. The reason they could not escape was that they did not have the funds to do it. For most people, the hurricane struck days before their next paycheck. Some people literally died because they did not have enough funds to evacuate the area. Many of the city’s poorest did not have credit records that enabled them quick access to capital, and so they were trapped in the city.
Costly Car Insurance
In some states, it is illegal to relate reckless driving and paying your bills on time. In the states where car insurers can make this correlation, they have jacked up the rates for people with bad credit. You need car insurance to drive in all states. If you do not have it, you can’t drive. In the US, a country where everyone needs a car to function, this can make getting a job and holding down a job almost impossible.
Bigger Property Insurance Prices
Some insurance companies believe that low credit scores translate to higher insurance claims. Those with poor credit are predestined with higher insurance claims, as a result. Maryland, California, and Massachusetts have jumped on this practice by making it illegal. Nevertheless, for people living in any other state they have no choice but to pay almost twice as much as those with good credit scores. In West Virginia, the contrast is stark. Someone with bad credit will pay an average of 208% more than someone with excellent credit.
Difficulties in Mortgage Refinancing
The housing bubble meant a huge number of foreclosures across the country. New banking rules were forced into effect that made credit scores even more essential for anyone trying to get a mortgage. Any home loan is harder than ever to get. If you need to refinance your home, this will be more difficult. In addition, even if you do happen to get the loan, the rates will not be anywhere near as generous as they were before.
Getting Any Type of Loan
When your credit is bad getting a loan can be very difficult but not impossible. If you do find companies that will give you a chance you can bet on having a much higher interest rate. There are some companies that specialize in loans for people with bad credit like Lindgren Financial. You may have to provide more proof of income or jump through others hoops to obtain the loan.
Finding it Hard to Rent
When you rent a home, the whole relationship between property owner and tenant is on timely payments. All property owners will check the credit worthiness of any tenant before they give them the keys to their new home. Eviction processes can take many months, a lot of strain, and a lot of money. It’s simply not worth it for many landlords. Most landlords are simply not interested in goodwill. If you have a bad credit score, this will exclude you from the most desirable properties. Many landlords won’t look past that number on their screen. They don’t care about your story.
Reduced Job Prospects
There is a lot of outrage in the US now because employers are performing credit checks on prospective employees. One in four employees must go through an employer credit check, and 10% of these people have been denied a job because of a poor credit record. While this may seem unfair, there are currently no laws against it. Sometimes there is no way to even check if your employer has rejected you because of a bad credit record. It’s impossible to prove.
Bad credit can destroy your entire life. If you want to stop bad credit from hurting you, pay down your debts and begin practicing good financial habits today.