A good credit score is an important thing to have but it’s difficult to maintain. Living without credit or bad credit is becoming more common and most wonder what the big deal is if I have a low credit score?
Credit card payments and the level of debt have the most impact on your credit score. The information contained in your credit report is also used by many financial calculations. This means that a lender will not only view your credit score but will combine your monthly minimum payments reported by your creditors and compare it to your monthly gross income. This is known as a debt to income ratio and is as important as your credit score.
If you’re deep in debt, living paycheque to paycheque or are constantly charging things on your credit card, this will make your life extremely difficult from getting a job, your children following in the same footsteps to getting a place to live.
Here are some of the costs of living with bad credit:
1. A big consequence with having bad credit is the denial for a loan. Being denied for a credit card or being denied for a home mortgage when you need it will not only cause you to get denied but it will also be embarrassing for you and affect you emotionally.
2. Creditors and lenders will view you as a higher risk and because of this you will be paying for that through higher interest rates. Over time you’re paying a lot more than if you would have should you have had better credit.
3. When you want to rent a home or apartment, you may be refused as most landlords will check your credit prior to offering you the lease. If you have poor credit, the landlords will think you’re less likely to pay them and will refuse you.
4. If you have a history of living without credit that is good, you will require to pay a large security deposit for things such as utilities and cell phones.
5. The decisions you make will affect your children. They watch what parents do and financially and there is a great chance that they will follow suit.
6. Another big consequence that will directly impact you and your family is worry and anxiety. This kind of stress can lead to all sorts of health issues for you and even cause problems in your family life.
Poor financial decisions can ruin your credit fast so if you want to maintain an impressive credit score or you want to improve it, make your payments on time and include a little extra each month to help pay down your debt. Keep all your accounts open as an open account without a balance is more beneficial than a closed one and also don’t open any new accounts.
For more valuable tips and information, visit www.prudentcreditrepair.ca
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