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Research: Financial Implications of a Bad Credit History - Credit-Land.com

Bad credit history literally translated into a bad credit score. This also means that one's creditworthiness has hit rock bottom. This could mean a lot of problems. However, there are some specific financial implications that mean a lot of trouble.

Loans

Bad credit history makes it very difficult for you to get loans. Since low credit score means a risky profile many banks would be unwilling to lend money to you. There are still a few lenders who would be ready to give you money. However, the problem is that interest rate is proportional to the risk. Hence you will get those loans at very high interest which virtually puts you into a difficult situation when it comes to repayment. Mortgages too become very hard to come by. House loans are not easy to come your way and hence your mortgage payments become very high and out of your budget which is a tough situation to get into.

Credit Cards

A bad credit history also creates a difficult situation for you to wriggle out of. This is because you cannot get good credit cards with benefits and the companies that do give you credit cards impose high interest rates. If you fall back on your monthly payments you end up accruing lot of interest on your outstanding balances. You will also miss out on a lot of savings and rewards which are usually available to those with higher credit. Those with bad credit history will also miss out on cash back programs and reward offers which usually amount to lot of discounts. If you are someone who spends a lot, good credit cards help you save a lot too.

Insurance and House Rentals

Credit score and creditworthiness are interrelated which is why it is so important to have a good credit score. Even if you have a bad credit history you should put in efforts to clear your outstanding dues as soon as possible as you are losing out on lot of opportunities. Even premiums of insurance go up because of your risky profile. In some cases, some house owners ask for credit report and to avoid the scenario you have to accept higher rentals for the house. This, after you manage to find one as it is virtually difficult to manage anything with a bad credit history, be it reward credit cards or low interest housing and personal loans.

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All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.