A bad credit rating can have multiple aspects of your life if you are not careful. While most people are well aware that a bad credit score can make it impossible to secure a loan, there is also a litany of other negatives associated with a dismal credit report. For example, even if you are able to secure a loan from a financial institution, if you have bad credit, you will likely be forced to pay a much higher interest rate. In some cases you may also be hit with fees because lenders consider you a risk.
In addition to dealing with high interest rates and potentially not being able to qualify for a loan at all, bad credit may prevent you from landing a prestigious job. These days potential employers, especially ones affiliated with financial services and products, often request a credit report review during the application process. If your credit stinks, there’s a good chance that you may not be offered the job.
Another entity to consider when you have bad credit is insurance. Many companies may order a review of your credit report before agreeing to issue you an insurance policy. Likewise, if you are trying to rent a condo or an apartment, bad credit may get in the way of securing a place to live.
The good news is that negative credit can be fixed and the black marks it causes will eventually disappear over time if you regain your financial footing. While no one ever wants to get to the point where he is forced to file bankruptcy, even that scar will fade after seven years if you are able to stay out of financial trouble.
Bottom line: There is no magic fix when it comes to erasing bad credit reports. Rather, you can improve your credit score by making payments to creditors on time and being very careful about living within your means. Also, keep an eye on your debt to income ratio, as many financial institutions often deny loans to individuals who owe exponentially more money than they make.