5 WAYS YOUR BAD CREDIT IS HOLDING YOU BACK
While we all know that having bad credit typically costs us higher interest rates, there are other very good reasons to clean up your bad credit.
There is a school of thought from some pretty influential financial “gurus” who seem to think your credit score is not important because once you pay off your credit – you will never use credit again.
While good in theory, what this belief fails to acknowledge is that it is the 21st century and our good (and bad) credit is used for a number of important reasons that don’t necessarily have anything to do with obtaining credit. That’s what we are going to cover today, the 5 reasons you should care about your credit score.
Here are five reasons why you want to have good credit:
BAD CREDIT AFFECTS YOUR HOUSING OPTIONS AND COST
Almost all property management companies will have some form of credit check. If you do not have good credit, you face being declined or required to have a higher deposit and/or a co-signer. It may take more time and effort to find a private landlord who will rent to you without checking your credit or who will weigh other factors more heavily. Like a good rental history, for instance.
BAD CREDIT AND CAR INSURANCE
Many car insurance companies now pull credit reports to determine whether or not they will insure you and whether or not to charge you higher premiums. Your bad credit will cost you more money and who wants that? Whether or not you intend to use credit – this is another good reason to protect your good credit score.
CELL PHONE CARRIERS ALSO CHECK YOUR CREDIT
You may be very loyal to your current carrier and think you will never need to switch and so you don’t have to worry about ever having your credit pulled to start new service. However, what happens when your provider merges with another company and it no longer provides you with the service you’ve come to expect? Or maybe another carrier has an offer you simply cannot pass up – or will meet your needs more than your present carrier? There are a number of reasons you may switch providers, and when you do, they will likely pull your credit.
You want to maintain a good credit score to avoid paying deposits or having to use a pay-as-you-go provider.
BAD CREDIT MIGHT MEAN HIGHER UTILITY DEPOSITS
Utility companies are another service that sometimes performs credit checks. For those with bad credit, that means bigger deposits to set up service. Some now offer pay-as-you-go type meters where you can pay for your service in advance and this may be something to look into if you have bad credit. An easier way to avoid having to pay more in deposits is to just keep on top of your credit. It’s like your health. It’s much easier to maintain good health – than to have to get healthy.
BAD CREDIT CAN IMPACT YOUR JOB SEARCH AND PROFESSION
Some careers require you to pass requisite character assessments and often this includes pulling your credit. Lawyers, Police Officers, Financial and Insurance Industry professions, for instance, will not only have their credit pulled but may require an additional explanation for any bad marks on your credit. It’s not fun to be questioned about your bad choices. It’s embarrassing and may limit our ability to obtain a job we really want or have prepared for. The best way to avoid being in a situation like this is to protect your credit and if it is not in the best shape, to take action steps to make it better NOW.
Some states do not allow employers to check your credit – you will want to check whether your state does or not.
BAD CREDIT MAY PREVENT YOU FROM RECEIVING CARDS THAT OFFER CREDIT CARD REWARDS
Many credit card companies have great travel and cash-back bonuses. However, the really good ones typically require good credit. If you have gotten to a place where you pay off your balances every month – no matter what, then you are in a good position to take advantage of these rewards. Imagine traveling for free or saving up your cash-back rewards to make a special purchase for free? Who doesn’t love FREE?
A word of caution – If you cannot control your spending and are not willing to pay your credit accounts off every month – then utilizing and credit and travel rewards are not for you.
If you currently have bad credit, do not despair. There are several things you can do to improve your credit score. Most importantly, pay on time and don’t carry high balances. These two things when combined with time – will lead to an improved score. Just stay on target.
If you need help getting your budget and your credit back on track, check out our Your Money 101 workbook and other resources in the sidebar or visit our ETSY shop.