What Are The Potential Consequences Of A Bad Credit Rating?

What Are The Potential Consequences Of A Bad Credit Rating?

by Rebecca Hall on 2 Apr, 2012

There are numerous effects a bad credit rating can have upon your financial situation, some of which may have a serious bearing upon the decisions you come to make in the future. This article will look at the different ways in which a bad credit rating can impact your finances, relationships and purchasing options.

A bad credit rating can have a significant influence on your personal life. High stress levels in the home and work environment can often be linked to poor credit ratings and an inability to borrow. Financial worries are often cited as one of the main contributors to ill health and fractures in personal relationships. Credit cards for bad credit are available, but you will need to look around for them.

Longer working hours are often required of those in such a situation to enable them to pay off the higher interest rates that those with a poor credit rating are exposed to. These longer hours are exacerbated by the fact that those with a poor credit rating often have less disposable income, due to the demands of a high level of debt, leaving them without adequate finances for holidays, pensions or retirement.

Such issues, in collaboration with the fact that owing large debts and being subject to high interest rates will mean many people are unable to pay off their debts within a lifetime, show how great an impact a poor credit rating can have on every aspect of your life.

A poor credit history may also make it more difficult to successfully apply for a mortgage on your first house, while in a relationship a poor credit rating will also affect the ability of both parties to borrow. Some landlords will run a credit check before allowing a property to be rented, meaning that any form of accommodation agreement may be difficult to reach with a poor credit history.

Many utility companies will run credit checks to ensure their services can be paid for, while the practice of employers running background checks on credit history to ensure they are hiring a responsible and diligent employee is on the rise.

Poor credit ratings will have a great affect on your ability to choose the right product for you in many situations. From selecting a credit card that works for you, to getting cheap and comprehensive insurance, a poor credit rating will severely limit your options as a consumer. Many people with a low credit rating will struggle to find even relatively small goods, such as mobile phone contracts, difficult to negotiate.

Finally, many people with a bad credit rating often have to suspend or abandon completely those dreams they held for the future. Applying for loans to set up your own business becomes increasingly difficult, while even applications for overdrafts on bank accounts are rejected.

Financial independence combined with the ability to work and play in the way in which you would like to are, more often than not, difficult to achieve due to a poor credit rating. It is readily apparent that a poor credit rating has an important and lasting impact on nearly all aspects of contemporary life and should be avoided. There are specialist poor credit credit cards that you can apply for, it is just a case of looking in the right places.


About the Author

Rebecca Hall

Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.