Being an adult means that you are free to make your own choices and determine your path in life.
Unfortunately, this freedom also means that you may be making mistakes without anyone to warn you away from them or bail you out. But hey, you live, and you learn, right?
While some mistakes are minor, capable of being fixed quickly, and act as lessons to avoid doing the same dumb thing, others have long-lasting consequences.
These are conundrums that you find yourself unable to recover from with ease or ones that have unexpected ripple effects. One such problem is a bad credit report.
Forgetting to pay your bills on time, especially if you find yourself strapped for cash, may seem like a forgivable offence.
However, when these debts accumulate, you will find yourself with many more issues than just more money you need to pay off. Here are some adverse effects of having a bad credit report.
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Challenges When Job Hunting
When interviewing for a job, paperwork such as your resume and references are typically required.
Some jobs, though, will go the extra mile and request permission to run a credit check. This is especially true for jobs where you must handle large sums of money or those high managerial positions that place you in a role of power.
Employers sometimes need to know that you are someone they can trust to handle money, and that is where your credit report comes in.
If it is terrible, well, you might find yourself passed over for someone with a better credit score.
Limited Renting Options
Unless it is explicitly illegal to do so, your potential landlord might run a credit check on you before deciding to rent.
This is understandable as they, of course, want to make sure that they will be paid for leasing you their premises.
If landlords find out that you have a bad credit score, they might decide to not rent to you. If they do, however, they may not do so without some caveats. You may be required to find a cosigner or find yourself paying a higher security deposit.
Thus, a bad credit report negatively impacts your ability to rent a home.
Therefore, you should be careful with your credit, unless you are sure that you already have a place to stay free and clear.
Difficulty in Getting Loans
A credit report details your accountability and timeliness in paying bills and settling debts. That said, banks will, of course, want to know this about you before they decide on approving your loans. As someone who really needs the funds, this will be a tremendous hurdle.
Steeper Interest Rates
Even if you manage to procure a loan with a bad credit report, you will likely find yourself burdened with more restrictive terms and higher interest rates.
You’ll find yourself paying more in the long run for such things as your mortgage, car loans, or general loans. And this will only make an already stressful situation even more challenging.
Higher Insurance Premiums
Saddled with a bad credit report, you may also find yourself having to pay higher insurance premiums.
This not only includes auto insurance but other forms of insurance as well, such as the one for your home. This is especially true if you have a recent bankruptcy on record.
Having to Pay Deposits
If you have settled any problems you have had with finding a place to stay, next you need to set up an account for your utilities and internet.
Here is another area in which you may find yourself having trouble when you have a bad credit score.
You will be able to set up the account with no problems. You might have to pay a deposit as insurance against the company potentially not receiving your bill payments.
Strain on Personal Relationships
Marriage means that you share a lot of things, although your credit scores do not merge. If you have a bad credit report, you still cannot breathe a sigh of relief yet.
While your bad score may not affect your spouse’s directly, it may still throw up some barriers. This happens when you both apply for something together. Overall, this may affect the relationship that you have.
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