How Bad Credit Affects Your Life

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Everyone has a credit score, and that simple three-digit number can make your life easier or harder. A credit score can range anywhere from 300 up to 850. Unfortunately, if your credit score falls below 600 it can have a serious financial impact in many areas of your life.

Short Falls 

In life, most people have periods of time where they run into shortfalls with their money. This can happen after you buy a new home, have a baby, or after a sudden illness. However, when these difficult financial times come along, having the ability to borrow money from a bank such as a personal loan or having credit cards to fall back on, will allow you to make it through relatively unscathed. When your credit is bad, those options disappear and you have only risky loans available with high-interest rates, or you’ll need to borrow from a family member. 

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Digging Your Own Holes 

A personal injury turns your world upside down. Everything from your finances, family, and day to day life is affected. Making things worse, you often find yourself scrambling to make ends meet during the overly slow communication between insurance companies, yours or others. It is common for those in this situation end up digging themselves into a financial hole through advance loans at high interest rates while they are out of work. If you end up in an accident through no fault of your own and become seriously injured, the claim may even take longer, causing you unwanted stress. Thankfully, if you search online you can find client-focused firms like Schwartzapfel Lawyers locations in New York. Although you may have to do some research, when you start working with legal representation that puts your first, it can resolve your claim quickly and get you back on your financial feet before making matters much worse. 

The Job Hunt 

Unbelievably, your bad credit score can put you at risk of losing your dream job. You applied for the job, made it through the first round of interviews and then when it comes time to move on to the next round, you find yourself eliminated from the running. More than ever, large and small companies are using your credit score as a piece of your puzzle. If your score is poor they regard you as irresponsible and someone who uses poor judgment. 

Higher Security Deposits 

It’s hard enough to find a rental property when your credit is bad. However, it has recently gotten even harder. If you should find someone willing to rent to you, expect to pay a large security deposit when you turn on the utilities. A security deposit may also happen with your cable service. 

Dwindling Your Resources 

When you have poor credit, it’s almost a given that your payments are often late. Unfortunately, making frequent payments after the due date will cost you in penalties that can range from a few dollars upward to thirty dollars or more per account. On top of that, you now have interest added as well. And, if that’s not enough, your credit card company may even increase the interest rate. Living paycheck to paycheck can also cause you to overdraft your account and that will cost you even more money that you don’t have. 

Starting a Budget 

The good news is that you can raise your credit score over time. The first step in the recovery process is to start a budget. This will allow you to see exactly the amount of debt you owe and to whom you owe it. It will also let you factor in payments such as excise taxes, that aren’t due each month so that when they come around, you’ll have the money set aside. 

A bad credit score affects every aspect of your life. Thankfully, it’s not a number you have to keep. You do have the ability to raise your credit score and get back to living a comfortable life.

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