Unless you are rejected for money, you normally don’t realize that you have a bad credit history. Using your credit cards to the maximum limits and ignoring your monthly commitments can make you fall into bad credit rating category. What will happen? You would not get any good loans when you actually need them because you were complacent in managing your finances.
People don’t realize that maintaining good credit score is very important. With unsecured loans and short-term loans available in the market today, people are becoming ignorant about managing their funds properly. As a result, they tend to take up numerous loans and maxing out their credit cards, which they are unable to pay later. Falter on your loans, and your credit score is impacted badly.
Many companies today look at credit ratings to approve loans or even hiring an employee. Your bad credit rating tells every truth about your personality, and hence, it can be extremely difficult in getting a job or a good place to live or even own a car. Here some after-effects of having a bad credit score: –
- Be ready to pay a higher rate of interest – We don’t say that you won’t get any loans if you have bad credit score. Even despite of bad scores, there are many crediting companies in the market today that approve your loans. But, obviously, it comes with a price. You would have to pay a higher rate of interest on your credit cards or loans you receive because you are a risky customer for the creditors. Therefore, good credit score will render you cheaper loans.
- Give security deposits every time – Everyone who is lending you money or giving you any service requires an assurance that they would receive their money timely. However, you don’t pay for your financial commitments timely for whatever reason it may be. Your credit score is dropped significantly. You might even have problems getting your daily utility items like phone, electricity or cable. For them to be assured that you won’t falter on payments, these companies would want you to give security deposits until which you might not any get any service.
- Difficulty in getting secured loans – Because of your bad credit rating, creditors think that you are a risk to them. Thus, allowing them to deny your loan application. Because of this, you might not be able to purchase your own house or a car, unless you improve your credit ratings.
- Denied employment – This is the worst thing that can happen to you. For paying your loans, you require a secured job. But, what if because of mismanagement of your finances, your credit score is impacted; you might not be able to get a good job that can provide you good money. Money companies before hiring their employees check credit rating. This gives them an idea about your personality, which can affect your performance on the job. So, you might have to settle for low jobs until you clear all your debts.
So, it is important that you manage your funds properly so that you don’t end up in this credit rating mess.