Bad credit, in and of itself, makes you feel bad enough, serving as a constant reminder of your past misfortunes and/or mistakes. Add to that the very real problem bad credit poses to your everyday life, and you have a heck of a problem on your hands at just about every financially related turn.
Thankfully, no matter how bad your credit may be, you can make it better by dealing with old debt and repairing your credit.
- Credit Cards. The worse your credit, the more trouble you’ll have qualifying for new credit cards if you qualify at all. Provided you do, your interest rates will be higher, which could range anywhere from 22 to 36 percent. You’ll also likely pay a number of fees that are not associated with cards issued to those with good credit.
- Auto Loans. As with credit cards, if you have bad credit, you’ll have trouble qualifying for an auto loan, if you qualify at all. The worse your credit, the higher your interest rates and, most likely, the higher the down payment required to secure the loan.
- Auto Insurance. Though it doesn’t make any logical sense why someone with bad credit would be in more accidents than anyone else, evidently insurance companies have reason to believe those with bad credit are more likely to file insurance claims. Considered a risk, you may get quoted higher insurance rates as a result.
- Home Loans. Even more so than credit cards or auto loans, bad credit can easily prevent you from getting a home loan. If you do qualify, your interest rates will definitely be higher.
- Renting. If you don’t qualify for a home loan, you’re really left with just one option — renting. But even that can feel next to impossible if you’re dealing with bad credit. On top of the first and last months’ rent to move in, landlords often require an extra month’s rent for those with bad credit. And often, even that isn’t enough, as landlords opt to limit their risk altogether by renting to someone with good credit instead.
- Utilities. Having your water, gas, and electricity turned on sounds like a simple enough process. But that’s not the case if you’re dealing with bad credit, as utility companies will most often require a deposit first, some heftier than others.
- Cell Phones. Though pre-paid cell phones are always an option (regardless of your credit history) the cell phone plans that generally get you better deals and better coverage require you to enter into a cell phone plan. However, if you have bad credit, you can expect to pay a deposit to enter into the agreement, as cell phone companies do run credit checks.
- Bank Accounts. This may come as one of the biggest surprises on the list. Though it would seem they are eager to take money from anyone who wants to deposit it with them, banks may be leery to open an account for those with bad credit and refuse service altogether. That said, your credit has to be in pretty bad shape for this to happen and, even if it does, there are online banking services that cater to those with particularly bad credit.
- Employment. As you may have heard, employers are increasingly using credit reports as part of their employment process. However, this is generally reserved for financially-related positions, and some states limit the rights of employers, including California, Connecticut, Hawaii, Illinois, Maryland, Oregon, or Washington.
- Business Start-Ups. Naturally, if you’re starting a business, you need start-up money. Unfortunately, if you have bad credit, your brand new business already has a strike against it as it’s your name whose credit will be checked to determine business loan approval.
- Relationships. When you enter into a committed partnership with a significant other, in which you share everything, that does not exclude your credit histories. Granted, even a spouse is not legally responsible for the debt you incurred prior to the marriage. However, any major purchases you want to make together, as a couple, will be negatively impacted if you have bad credit. This not only makes it difficult to buy a house or a car together, for example, but it puts an unwelcome strain on the relationship in general.