There are a series of stigmas associated with having bad credit. Many people that are facing a poor credit score are worried about being marked as a liability. Unfortunately, bad credit can stick with us much longer than we might like. If you’re dealing with poor credit, it’s important to understand the effects and how bad credit will affect you over time.
Your Credit Score
Credit score and credit rating are two terms that are commonly used in an interchangeable format. Your credit score is a report that helps lenders make a decision on whether or not they should provide you with a financial product. Your credit score represents the overall likelihood that you’re going to pay back any money you owe. Credit scores are brought to a credit provider by three major credit bureaus. The bureau that each bank or lender uses often differs so it’s important to check your reporting from each vendor. Many credit bureaus have partnered to create a new credit rating in a system that follows this same score range.
Having a low credit score or poor credit history can impact you financially for a long time. It’s likely that you’ll be denied a line of credit. A low credit score could also indicate that you are a high-risk borrower and this will mean that you’ll only be able to access higher interest rates. Paying more fees and higher interest rates often means that you will have a higher monthly payment and over the course of years, this will lead to you paying thousands extra on your loans.
Consolidating your loans, working to pay bills on time, and ensuring that you can establish a better credit rating before you access financial products is the best course of action for a brighter financial future.
This post was written by Kristian D’An, owner of Lux Credit LLC and CCA board certified credit repair specialist. Lux Credit offers credit repair services for those looking to improve their credit!