How Bad Credit Can Impact Your Life

Credit is easy to ignore until it isn’t. Nearly a third of Americans have credit scores of 601 or lower, which is considered bad credit. Aside from applying for a mortgage, how does that score actually affect you?

Cell Phone & Utility Contracts 

Anytime you enter into a contract for a service that will require timely payments your credit will be checked. If your score is low enough to show that you may be unreliable, companies will pass on your business. If you are not denied outright you will probably face a higher interest rate on your payments. This is especially true with cell phone carriers forcing people to go with pay-as-you-go plans which can be a lot more expensive in the long run.

This can also be true of utilities like electricity. While you may not be denied outright you may face higher fees or tighter contracts than you would if you had better credit.

High Rates

People with bad credit pay more in interest. Lower scores mean higher risk to lenders so to offset some of that risk they will attach a higher interest rate to a loan or credit card. So if you are one of those 68 million Americans with bad credit you will end up paying more in interest.

Increased Premiums

According to the National Association of Insurance Commissioners the vast majority of insurers take credit into consideration when making policy (in states where that is not banned) decisions namely 95 percent of auto insurers and 85 percent of home insurers.

Job Rejections

Believe it or not, having bad credit can affect your career. While most employers won't look at your score (they aren't lending you anything) they will look at your credit report. If you are going for a position in government, finance or management this could put you at a disadvantage. According to the Society for Human Resources Management 34 percent of employers use credit checks on some job applicants and 13 percent conduct checks on all applicants with one in ten being denied a job because of a bad report. Bad credit could also cost you a Security Clearance, which can cost you a number of government jobs.

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