THE TRUE COST OF BAD CREDIT
When people think of what it means to have bad credit, they usually picture someone with a low credit score or a lot of negative information on their credit bureau report such as collections, charge offs or bankruptcy. This is true, all of this does constitute having bad credit. But what is the effect of having bad credit? Does it mean you won't get a low interest rate on a new car loan? That may be the case but the true costs of having bad credit go much deeper than that.
People with bad credit suffer in ways many of us never think about. Having bad credit could mean an employer may pass you over for a job that you are otherwise qualified for. Employers regularly check a potential candidate’s credit in an effort to determine if there are any red flags they should be concerned about. Potential red flags include recent delinquencies, high credit card balances on several accounts, active collections, and recent charge offs. This is especially true among employers in the financial industry and government contractors in sensitive areas. People with bad credit and a lot of debt are seen as possible security risks especially on the national level. Because they may be more easily tempted by offers of financial gain. However, you should be aware that most employers do need your written permission in order to see a copy of your credit bureau report.
Having bad credit can affect a person’s self-worth. People with bad credit are generally thought of as less responsible than people with good credit. Bad credit may even have a negative impact on your dating life. According to a February 16, 2019, article published by MarketWatch, 42% of adults say that a person's credit score would affect their willingness to date that person and women are three times more likely to consider a potential partner's credit score. Why is this? It goes back to the assumption that people with bad credit are simply not responsible, and therefore will not be good providers. Although irresponsibility is not always the reason a person has bad credit, it can none the less be an unseen obstacle when it comes to finding that perfect someone. Would you consider someone with bad credit as marriage material?
Lastly, one should consider the effects of having long term bad credit. If you are fortunate enough to find that special someone and decide to get married, having bad credit may impact where you are able to purchase a home. A married couple will generally apply for a mortgage loan together. If you are the one with bad credit, your partner may have to apply alone. This will have a negative impact on your purchasing power. You may not be able to qualify for as large a mortgage as you otherwise would have. This may mean you cannot buy that dream home, in the best neighborhood, with the best schools, with the lowest crime rate, that you were hoping for.
As you can see from this brief overview, having bad credit impacts many aspects of a person’s life. Acquiring and maintaining good credit should be everyone’s goal. Having good credit is an asset that will benefit you your entire life. I will delve deeper into these issues and many others in future articles. What are your thoughts? Did you find this article helpful? Please take a moment to comment on this article and share it with someone.
 Staff. “Using consumer reports: What employers need to know.” Fair Credit Reporting Act (FCRA) Oct 2016, https://www.ftc.gov/tips-advice/business-center/guidance/using-consumer-reports-what-employers-need-know
 Fottrell, Quentin. “Your Partner's Credit Score Could Reveal Red Flags That Have Nothing to Do with Money.” MarketWatch, MarketWatch, 16 Feb. 2019, https://www.marketwatch.com/story/nearly-40-of-americans-want-to-know-your-credit-score-before-dating-2016-05-03.
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Tracy G. Blades