How Bad Credit Affects You

There are very few in things in life that can be more damaging than a bad credit score. It will affect you in ways you might not even realize, on top of possibly costing you hundreds of dollars extra a month. It all adds up to paying untold thousands of dollars, all of which can be avoided by reestablishing and repairing your credit. Here are some of the common ways bad credit can negatively affect you:

• Credit Cards: If you have bad credit, you'll stand almost no chance in getting approved for prime credit cards that offer good rates, no yearly fees, and large credit lines. Instead, bad credit leaves you stuck with some of the "sub-prime" cards. These offer very little to you compared to prime cards. Many will require a yearly or monthly fee just for having them and rarely offer any of the cash back or incentive bonuses of prime credit cards. The worst part about these cards - most of them do not even report your positive credit activity to the credit bureaus, meaning they won't help you in improving your credit score.
• Auto Loans/Financing: While there may be some car dealerships that offer auto loans to people with bad credit, the loans carry a much higher interest rate to accommodate for the risk they take in offering them. The interest rate on such a loan could be as much as 10% higher than that of someone who has good credit. Depending on the car's payment, this could easily add up to a $100 dollars a month and almost certainly end up costing you several thousand dollars more over the years.
• Mortgages: If you thought an auto loan costing you several thousands dollars more was bad, just think about the amount of extra money paid in interest for a home mortgage. Bad credit will increase the interest rate on a home anywhere from 2% to 6%, which can be dramatic when seen over time. The monthly payment on the house will undoubtedly go up several hundred dollars and, depending on how long it takes to pay off the home, the added interest could add up to over $100,000 over a couple decades.

Make sure that all your questions can answered when reestablishing credit. Visit our frequently asked questions page.