How a Bad Credit Score Can Affect You

This guest post comes from Moneysupermarket.

If you currently have bad credit, it may affect you in more ways than you think. You should try to fix your low score as soon as possible, as it influences more than just applying for credit cards.

What many people do not realize is that the current credit system has a bit of a backward structure. Those who have more money have to pay less, since companies trust them to pay their bills. Individuals who have little money end up paying extra fees and higher interest rates so that the lenders are sure to make a profit.

Credit can affect your ability to get loans and credit cards. If you do qualify for credit, the interest rates will probably be variable or sky-high. Individuals with bad credit almost always end up paying more! Many lenders require those with low credit scores to pay security deposits, annual fees and incredibly high late charges. They may also reject any requests to raise credit card limits or lower interest rates.

In general, individuals with good credit have an easier time when it comes to borrowing money. If they need to make a payment a few days late, companies are usually more willing to work with them. People with good credit who make a late payment are also less likely to have it reported to credit agencies. For example, if someone with bad credit is unable to pay their electric bill on time, the company may turn off their power that day. However, if the customer has good credit, the electric company will try to communicate with the person before taking action.

Low credit scores can also affect your cell phone plans. Cell phone companies will sometimes limit the amount of active phones that a person can have on their plan.

Your credit record even affects the workplace. More and more companies are doing credit checks on potential employees rather than checking their references. If they see that a person has many lawsuits or multiple unpaid bills, they will assume the person is irresponsible and unfit for the position.

Another way low credit can affect your career is if the job requires travel or outside purchases. Many companies expect the employee to pay for their gas, airfare or hotel fees with a personal credit card and they reimburse them later. Explaining that you are unable to obtain a credit card due to a low credit score can be embarrassing. It can also be difficult for the employer to find a fair solution to the problem.

Credit scores can also affect your romantic relationships. Engaged couples are being encouraged more than ever to sit down and discuss credit prior to getting married. If your credit score is low, your fiancé may feel like their credit will be negatively affected after marriage. They may also assume that you are irresponsible and rethink their decision to marry you.

Contrary to popular belief, credit affects more than just credit cards and loans. The good news is that if you have bad credit, you are not alone. The financial crisis left many trustworthy people with terrible credit. Fortunately, there is help out there. Mending your credit score may take some patience and a bit of self-discipline, but it is definitely worth it in the end.

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