The cost of bad credit: it really hurts you day after day
The economic crunch has left many people with a bad credit score. It doesn’t take more than a defaulted credit card payment or a foreclosure to ruin your credit report. Your bad credit will cost you in more ways than you perhaps realize. It is important to understand the cost of bad credit and how it really hurts you day after day.
Higher Interest Rate The foremost impact of a bad credit is on the interest you are charged by lenders. The equation is simple: the lower your credit score is, the higher the interest rate charged would be. You will not be able to qualify for the standard market interest rate other borrowers do. Moreover, if there is a recession or the market is bad, you might not even qualify for a loan.
Stricter Terms & Conditions Lenders tighten their belts when it comes to applying terms and conditions on the lenders. You will have to deal with stricter rules and regulations. Even a slight misstep could cost you a lot in terms of extra fees. Also, you will to bear constant reminders from the lenders about your next payment which can get frustrating after a while.
Extra Fees There are many types of fees that can be added to your payments by the creditors if you have bad credit. For each mistake or late payment, you will have to deal with penalties, deficiency payments, legal fees and of course, late fees. You might also be charged default rates if you regularly fail to make payments on time. The fees can be as high as thousands of dollars in the case of home loans. Even on credit cards and other loans, these extra fees can really add to the bill.
Decreased Employment Opportunities Credit checks are increasingly being used as a part of the screening process for applicants by employers. If your credit is checked and you have a bad score, you might lose out on a great job opportunity. Employers feel that employees who have good credit handle money with care and can be considered reliable and responsible. At your current job, you might be passed over for promotions because of your bad credit.
Higher Premiums You will have to pay a higher premium if you want to get insurance on a bad credit. You will generally have to pay premiums at a rate higher than what is charged from the other customers. Moreover, there is a greater chance of your claims being denied if you have bad credit. The insurance companies put in extra effort to verify whether the claim is genuine if the client making the claim has bad credit. These are some of the ways in which your bad credit costs you. There are many ways you can boost credit score. The best approach is to get in touch with a credit repair company and discuss your needs. They will suggest the solutions you need to get rid of your bad credit.