You might think that bad credit will not do much harm in the long run but it can be pretty detrimental to a lot of daily life. There are many different impacts of bad credit. In order to start thinking about these impacts though, one must first understand the definition of bad credit in today’s world. Here is a breakdown of having bad credit and what you can do to reverse its effects.
A Fluid Definition of Bad Credit
So, what is a good credit score anyway? The definition of “bad” you get is going to differ from person to person and will probably be different depending on the institution. There are some who cannot possibly imagine their score dropping below 700. Others are perfectly content to sit in the 600s.
A general benchmark of bad credit would be along the lines of anything south of 600. Even below 650 can be questionable. There are certain things you can do with a credit score that is between 600 and 650 that you could not do with a sub-600 score. Obviously, the higher your score, the more favorable your interest terms will be on any borrowing that you do.
Not Getting Approved
An unfortunate reality of being someone with a low credit score, is that you are likely to be denied access to some of the things other borrowers can get. For example, you might not be able to get a car loan. You might even be denied rent at an apartment or house depending on just how poor your credit score has become. This may sound like a scary scenario, but it is possible if you aren’t vigilant in making payments or checking up on your score from time to time. Take time to manage your finances, whether it’s a weekly review of your spending, taking tax and accounting courses, or just updating your budget every month.
Speak to Creditors, Don’t Ignore the Problem
Burying your head in the sand when it comes to your credit score is a good way to stick with a bad score. Some people think that if they just avoid thinking about their bad credit and ignore those collection calls from creditors, that this will somehow solve things for them. That is not the case. Instead, take the time to call and let them know of your situation. Most creditors are willing to work with you, so long as you are honest with them about the circumstances of your situation. It is all a matter of putting your trust in the right people and having them trust you too.
Having good credit takes time, work, and a lot of good self-management. Be sure you pay attention to your score and use natural ways to get it higher like making payments on time and talking to creditors when you are in trouble.