If, in the past, you have missed payments or closed a credit card account due to bankruptcy, then you are most likely to have bad credit rating. This does not only prevent you from being able to take out a loan or apply for a new credit card. But the effect of having a bad credit score doesn’t end there. Bad credit can actually cost you a lot of money, which could make financial problems balloon out of proportion.
Here are a few ways bad credit is costing you more money:
You have little to no financial flexibility.
Say, you were able to get a mortgage or credit card account. With a bad credit, there is a big chance that the interest will be quite high, preventing you from managing your debt effectively. Bad credit also means you won’t be able to enjoy the benefits of refinancing and credit card deals.
You will incur higher interest rates.
As already mentioned, even if you get approved for a new credit card account, there is a possibility that it will have higher interest rates. This will mean higher payments every month if you want to pay off your debt in as little time as possible.
You might have a hard time getting employed.
Having poor credit can be a red flag for prospective employers. It so happens that most employers review credit histories of their job applicants. Credit problems usually have negative implications, including being irresponsible, not able to focus on the job, etc. This means that you could miss out on the best opportunities.
Your insurance premiums could be higher.
Some insurers could charge higher premiums for those with credit issues, while they offer discounts to those with flawless credit rating.
So you see? It’s important to maintain good credit standing to ensure you won’t be losing money in the future.