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Contributed by Michael Crean, Consultant at GBC Credit Repair in Greensboro, NC

Racking up a bad credit score may seem harmless while you are doing it, but it can affect you in many different ways. Bad credit comes from having too much debt and not being able to make your monthly payments. The lower your score becomes, the more risk you pose financially.

Even if you seem to be getting by at the moment, many lenders will judge you based on your credit rating. A bad rating could result in your downfall in a number of different areas. Here are some of the ways in which having bad credit can affect your life.

Consequences Of A Bad Credit Score

Increased Interest Rates

If you are applying for a loan or credit card, your personalized interest rate will be based on your credit score. The more likely you are to keep up with payments, the lower your interest rate will be. However, if you have a bad score, this can raise these rates significantly.

Borrowing money at higher interest rates means that you will have to pay a whole lot more in the long run. And the more you borrow, the more these payments will continue to increase. This can result in a downward spiral. Keep your credit score low, and decrease the risk for money lenders.

Credit Approvals Become Harder

Having a good score allows you to pursue more opportunities. On the other hand, having a bad one can close certain financial doors. If you are interested in applying for a new loan or line of credit, you will need to have a good enough rating.

Those with bad credit scores will often have their loan applications denied. If your rating is too low, most people will not want to lend you money at all. If you are looking to take out some new credit, then be sure that your score is looking healthy.

Insurance Premiums Increase

Banks aren’t the only people that check your credit score. If you are going to be taking out any insurance policies, your credit score can also affect your premiums. This is because insurance companies see lower credit scores linked to more filed claims.

Even if you haven’t filed any claims, a low credit score will increase your premiums.

Landlords Also Check Your Credit

Applying for a new apartment or space to rent out? Your credit score may decide whether your application is a success. Many landlords do a credit check on applicants to make sure that they do not pose a high risk. A healthy score can be linked to someone with financial stability.

A bad rating could lose you that dream apartment - even if you are able to afford it. Those that do have their rental applications accepted may have to pay a higher security deposit based on a bad score.

It Can Be Harder to Get a Job

A bad credit score may not have anything to do with your work performance. However, this is often a factor that future employers will consider. Having a bad score can mark you as more of a risky or unstable person.

This is most commonly applied to financial institutions or government agencies. People that require a security clearance may also get affected by poor credit performance.

Cellphone Contracts Can Be Denied

Taking out a cellphone contract is basically another form of credit. Just like applying for a loan or a new credit card, your financial risks are considered by cellphone companies. If you have a low score, your application may very well be denied.

If you are approved, your contract options may be limited. Those with a bad rating will not be able to apply for the more attractive contracts or the latest phones. Any options that your carrier may offer you will largely be based on your credit score.

Buying a Car Can Be Difficult

Taking out a car loan also depends on your credit history. Before taking one out, banks will need to do a full credit assessment. Those with a bad score can get denied a car loan completely. Otherwise, if you are approved, your interest rates will be set higher. This will result in increased payments each month.

It Can Put Pressure On Your Relationship

Your credit profile remains separate from your spouse’s after marriage. However, their credit score can still affect your life. If you are applying for loans together (such as a home loan), your spouse’s credit score will be considered just the same way that yours will.

This can be a difficult factor in relationships, and it can put a lot of strain on people. Having the best possible credit score will not only limit your financial risk, but it can help your spouse’s situation as well.

Keeping a Good Credit Score

You know that a bad credit score needs to be avoided at all costs. So, how do you improve it? Your credit score is calculated by how well you treat your credit. This means that people who always make their payments on time, and don’t build up too much debt, will have a higher credit rating.

As long as you keep your debt to a minimum, and practice healthy borrowing habits, your credit score should improve. There are also some credit cards and websites that allow you to track your score. This can be useful to consider before you make that important application.

Final Thoughts

Having a positive credit score can lead to a much happier life. That's where Innovo Credit Repair comes in! As soon as you take out any kind of loan, make sure that you have a good system in place to pay it back. Otherwise, you could end up creating a very bad rating for yourself.

A bad credit score can put pressure on your work life, personal life, relationships, and financial security. It can hold you back from opportunities and potentially prevent you from reaching certain dreams. Don’t let your credit score get worse before its too late - this is something that you will need to stay on top of at all times.