Bad Credit Impacts More Than Your Ability to Get a Loan

Who needs good credit? If you’re not looking to purchase a house, pay for college, or get a new credit card, it really doesn’t matter… or does it? What most consumers still don’t understand about credit histories and scores is that it follows them for the rest of their lives. It is essentially a financial fingerprint that is used by companies from all industries to make decisions about your trustworthiness. A bad score or disheveled history, as such, can not only exclude you from getting things like a house, credit card, or higher education but can seemingly make things you are approved for a lot more expensive.

Consequences of a Poor History

Yes, it is true that a poor credit score or history can make it more difficult to apply for mortgages, auto loans, student loans and credit cards. However, there is more to this story. For those with bad credit, one look at your history could essentially cost you hundreds of extra dollars on products and services that you enjoy.

Let’s look at a few examples. Car insurance companies use more than your driving history to determine how much you’ll pay for a premium. Your credit score for insurance companies is used to determine the likelihood that you’ll file a claim. If you have bad credit, you will pay more each month. The same goes for cable or utility services. Those who have bad credit are required to pay a sizeable deposit. So, as you can imagine, bad credit could cost you a ton, even if you’re not trying to apply for a loan.

How to Fix the Problem

No one has money to throw away, and since bad credit means increased interest rates and higher costs for products and services, the best solution would be to improve your credit and build your score. Below are some ways to do this:

Use a Loan to Pay off Smaller or Older Accounts – While you may not be able to pay your student loans off in full, you can start chopping down your debt by paying smaller and older accounts first. For example, if you have an old cable bill on your account, you could apply for alternative payday loans for bad credit. If eligible, you could receive as much as $1250 to pay off the old account (obviously, you’ll want to make sure that you keep up with loan payments to avoid more debt).

Negotiate a Settlement – If you’ve had accounts that have been past due for a while, you can contact the creditors to negotiate a settlement. This can sometimes reduce your out of pocket costs by eliminating late fees and collection costs. Paying the settlement amount in full also changes the status of your account. If you’re unable to negotiate a settlement, at the very least, work out another payment arrangement that you can afford.

Pay the Minimum – Though paying a measly $30 to $50 might not seem like much on a credit card bill in the thousands, paying the minimum amount does keep your credit from getting flagged for late payments. It also prevents your credit card company from taking further action on your account.

Cut Back – If you can’t find additional funds in your budget to dedicate to your debt, you need to reevaluate and try to cut back on your spending. Stop using credit cards altogether, skip eating out for a while, and perhaps eliminate unnecessary spendings like cable subscriptions or unlimited data plans.

Earn More – Another option, if you can’t seem to find excess cash to pay off your debts, would be to earn more. You can start a side hustle and dedicate all of the earnings towards paying off your bills.

Bad credit isn’t a joke. If you thought that having a poor credit history wouldn’t impact you because you’re not looking for a house, car, or student loan, then you haven’t been fully informed. A poor credit history can not only keep you from obtaining things you want and/or need, but can make them a lot more expensive for you. Since no one has money to waste, your best option would be to use the above-mentioned tips to clean up your credit history and get back on track.


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