Bad credit history is often characterized by inconsistent bill payments, outstanding dues on a credit card very close to the credit limits available on those credit cards or lot of late payments or entirely missing bill payments in some billing cycles. A bad credit history is not a welcome sign especially if you need loans, credit cards in the future or other financial assistance. The reason is simple. Every time you approach a lender for financial assistance, the first thing that is done is to request the 3 credit bureaus for your credit history, which is it is a great asset that you build over a long period of time and yet easy to ruin within no time. Here are some of the ways in which a bad credit history can hurt you very bad.
You cannot get a personal loan easily
Personal loans are taken when you need smaller or manageable amounts of money for expenses that cannot be covered by your savings or your monthly income. Whether it is for your wedding, for items in your house or to get furniture, personal loans prove quite handy. If your credit history is bad, getting a personal loan approved for a decent interest rate could be very difficult. It means that you have a lesser chance of getting financial help when you are in an emergency.
The interest rates on your credit cards would always be higher
By having a high APR on your credit card, you are being exposed to risk of paying higher interests on your outstanding dues when you miss your card bill payments. Higher interests could accumulate quickly and add to your principal outstanding causing your debts to increase exponentially.
Your credit cards have fewer rewards
A bad credit history invariably means that the credit cards approved for you will not have attractive features or incentives. Whether it is cash back offers, 0% balance transfer
initial periods, frequent flyer miles or discounts at gas stations, grocery stores or shopping malls, they are all reserved for those credit card customers who have a very good credit
history. It means that because of a bad credit history you are losing a good chance to reap a lot of benefits and also missing the opportunity to save quite a lot of money.
Vehicle loans and Insurance are more expensive
Those who have a bad credit history often get more expensive vehicle loans as well as higher premiums on insurance. This means those with bad credit history often get trapped in situations where their debt is likely to go even higher. Higher interest rates on vehicle loans make it harder to repay them. The same is the case with insurance premium. The higher it is, greater will be your monthly expenditure. Thus a bad credit history will not only mean higher interest rates, it will also translate to less savings in the future.
Bad credit history could be a problem for getting houses on rent or jobs
Employers and land owners too might ask the credit bureaus to get the credit history.