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Unexpected Consequences of Bad Credit

Employment

Like it or not, employers address credit reports of their applicants and employees to make even more informed decisions when hiring or firing. More than 50% of large companies run thorough background checks of their prospective employees. This may sound unfair, and it probably is, but this is something you must remember the next time you swipe that plastic or miss on a payment. Potential employers may rate your responsibility level based on your financial report, so if you aspire for a position in one of the major companies, prepare for that check.

As a result, applicants with poor credit may have to take on jobs that pay $10.000 less than the applicants with better financial score. That is 100.000 in ten years’ time!

Insurance

Customers with a poor score sometimes pay twice as much for a car insurance than the ones with an average score. Why would car insurance companies make it so rough for those who struggle the most? Insurance companies assume if you have been irresponsible with your finances and got yourself into the bad score trouble, you might also be an irresponsible driver. And the same goes to all insurance companies, not just those dealing with cars. They all pull your credit reports, alas.

Rent

Rent is probably one of the worst hidden consequences of having a bad credit. While rentals are probably the only thing that do not get recorded in your financial report your being the most responsible rent payer does not show anywhere in your financial history.

On the other hand, landlords do want to inquire into your credit report. How ironic is that? Landlords want to feel comfortable renting their property to you, so once they see your far from perfect score they can choose to charge you a deposit that is double or triple as high as if you had an average score. This is especially true with rentals in large cities like New York and Los Angeles.

You may want to put yourself in the landlord’s shoes: if the renter has a history of being late or missing on car insurance payments and credit card bills, there is a high probability he may be equally irresponsible with his rent.

Likewise, if you want to buy a home, bad score will get you into a higher mortgage monthly bill.

Monthly Income

You may know that having poor score means you have to pay high interest rates, but you may not know the actual cash behind those scores. You may want to sit down with all you bills, credit cards and calculate how much you are paying in interest rates on each of the items in your debt list. Then, sum that up and take a sober look at the staggering cash amount you pay out every month.

One more item on the cash list is utilities. Folks with a poor score often have to pay significantly larger deposits to get their utilities turned on: water, heat, electricity and so on. Ridiculously, you may even pay more on your cell phone bill because poor score forces you to opt for a prepaid service rather than the regular monthly service.