A bad FICO® Score is one of those realities of finance that people often forget. It’s too frequently out of sight and therefore, largely out of mind. Nevertheless, once you are saddled with it, it’s a shackle that is hard to shake. You are tied up with bank fees and bad interest rates that actually cost you more in the long run.
Your FICO® Score can also put a strain on your personal relationships and leave you feeling disempowered in ways that you wouldn’t even expect. Here are ten shackles that are keeping you bound by bad credit.
1. An Emergency Leaves You Floundering
Emergencies happen without warning or reason. They throw our world into a tailspin and can leave us needing immediate access to money, whether for medical fees, or an emergency flight. A bad FICO® Score bars the door to borrowed money that would take care of these expenses and can turn one emergency into two.
2. Interest Rates Are Exponential
A bad FICO® Score puts you in the category of “higher risk” for lenders. You may still have access to credit or loans but your interest rate, which comprises the cost of your borrowed money, will be higher to account for that risk to the creditor. Higher interest rates can add untold expense to your debt. Your interest could even accumulate to a sum higher than the amount you originally borrowed! Needless to say, this is beyond unproductive.
3. Down Payment Pain
When borrowing money for a car or a house, you will often be required to provide a down payment. A down payment is a payment used in the context of the purchase of expensive items, whereby the payment is the initial upfront portion of the total amount due and is usually given at the time of finalizing the transaction. A higher down payment is a safety insurance to creditors when you carry a risk, but can hurt when your budget it tight.
4. Your Job Is On The Chopping Block
There are a number of reasons that employers are starting to check their employees’ FICO® Scores. If your position is competitive, your FICO® Score might indicate your capacity for responsible spending and your ability to earn for your company. Similarly, a bad FICO® Score might indicate an increased likelihood for dishonesty and stealing from your employer, or at least an inability to handle your finances, putting your job in jeopardy.
5. The First Date Is Awkward
More young people are becoming aware of the importance of FICO® Score and are bringing the issue up earlier in relationships. There is nothing worse than having this dreaded conversation with your new partner.
6. Relationships End Fast
When it is eventually revealed that you have bad credit, the steps to building a relationship or family become exponentially more challenging. The more you are denied loans or credit cards, the more you will be forced to borrow money from those close to you. This may be a temporary solution but it encourages cracks in the foundation of your relationship and leads to resentment in the long run.
7. Travel Dreams Are Crushed
Mobility is one of the first things to be affected by poor credit and payment history. It is near impossible to purchase a plane ticket or a car without a credit card and a fair to good credit score. Your dream trip will be put on permanent or indefinite hold when you’re struggling with bad credit.
8. You Don’t Have A Cushion
When you’re constantly focused on reducing old debt or credit cards that are maxed to their limit, there is no leeway for saving. You get in a cycle of living hand to mouth and entirely lack disposable income for treats or the truly sweet stuff in life.
9. Poor Mental Health
The worst thing that bad credit can do is throw you into a dark place of worry and fear, rendering you unable to fully enjoy your life. You are plagued by the imminent threat of a phone call from a debt collector and can’t focus on the things or the people you love.
10. Your Life Stagnates
When you’re held back by bad credit, you have a harder time landing a job or landing a promotion. You have to struggle to find an apartment or make big purchases for a car or a house. Your relationships suffer as does your personal happiness. The cycle of debt builds until it seems too mountainous to handle.
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