Hindrance of Bad Credit  

- Anita J.

You may not understand exactly how your credit affects your capability to purchase anything from a car to a home and how bad credit can cost you when you need to apply for a loan of any type. Did you know that bad credit can sometimes cause you to be looked over when it comes to employment and even promotions on the job? You may apply for employment with a bank as a teller and they will tell you upfront that your credit does not matter, however, they are not always telling you the truth. The way many employers look at your credit report is that if you cannot manage your own affairs financially, how can they put you in charge of their money.

The same problem comes in when you wish to purchase even a used car where you must get an automobile loan. The lending company will look at your credit score and say, “No way, are we going to risk it.” It is their money and they have to be able to trust you to pay them back the money that you borrow. If you have bad credit such as defaults on loan, bankruptcies, late payments, foreclosures, items turned over to collections and the list goes on and on, they are not going to trust you to pay them the money you need to borrow.

You may find someone out there that is willing to give you a loan but you may learn that you are going to have to pay such high interest rates that you will once again find yourself defaulting on a loan because the payments were too high for you to afford.

Let’s take a look at what your credit rating is based on. Some of the factors include your payment history, the amount of money you now owe, how much money you may owe on revolving account, and the length of time you have had these accounts. All of these combined will give you a credit score. The highest credit score that anyone can possibly achieve is 850. The higher your score they more likely you are to find a lending company that will give you a loan with a good interest rate.

The lower your credit score the higher risk you are. The low score shows that by your history you will not be able to pay back the loan.

Many people do not even know what is on their credit report, which is a huge mistake. Many people are now learning when they check their report that there are items on their report that are incorrect, not theirs, or have been charged off and should no longer be on the report. Each person should contact the three major credit bureaus at least yearly to request a copy of their free credit report to ensure that everything is accurate before they learn about problems when applying for a loan.