Is Having Bad Credit Worse Than a DUI?

You can’t go to court over a bad credit score. You won’t go to jail over a bad credit score. But having a bad credit score limits you in many ways, so being in credit trouble might feel as bad as if you were in legal trouble.

Unfortunately, bad credit affects more than just your ability to get loans. Some businesses use credit scores to determine who they will hire and who they won’t hire. Interest rates and insurance rates are sometimes based on your credit score because these rates are based on the likelihood of your paying on time. In some states, insurance rates are higher for people with bad credit than they are for people with DUIs. Whether determining your insurance rate according to your credit rating is right or wrong, your credit rating has more impact on your life than you’d think.

Poor Credit Lenders

Many businesses will still loan you money even though you have bad credit. Some credit cards and car dealerships and rent-to-own stores will allow you to make purchases and owe them money. Interest rates are higher using these forms of credit, and payment times are shorter than usual credit payments. Also, beware of those who offer to help you rebuild your credit using their cards. If you are in financial trouble because you can’t afford to pay your credit card bills, having another credit card will just make the situation, and your credit score, worse.

Short-term, high-interest lenders who attract folks with bad credit scores can give your credit score a boost if you can afford to pay the payments. Unfortunately, the high-interest rates and a short period of the loan routinely make it necessary for the person receiving the loan to take out another loan to cover the loan they already have. The vicious cycle continues. More bad credit can be the result.

Living Up to and Beyond Your Means

Life happens. Unfortunately, many people live from month to month even if they have a good income coming in. Because a couple has enough credit, they use it to buy immediately all of the things they want instead of taking the time to pay for the niceties of life over a period. If life and jobs were secure, this rationale would work. But life and jobs are not secure. If someone becomes ill, loses their job or dies, they are not able to make their monthly payments on all their credit cards with only one income. Because credit is stretched to the limit, the couple may be making credit card payments rather than developing a savings account. So when disaster strikes, they are swallowed up in debt with no savings.

Credit Scams

Carefully read any mail or emails that appear to come from a reputable lender. Occasionally a scammer will get your contact information and try to get you to sign up with them.Read the fine print to determine whether or not the email is legitimate or not. Also, never change your account information from an email request. Always go to the company’s site to check your login and password information.

If a company asks for a fee up front to process your credit or asks you for a processing fee, they are trying to scam you. Asking for money to process an account before it is finalized is illegal. Also, check the company’s contact information out before you sign up with them. If anything looks unusual or shady, don’t sign up with them.

Don’t give any personal information out over the phone, online or through the mail. All information such as name, birth date, Social Security number and any financial account information is private and should not be given out.

Going Straight by Improving Your Credit Score

You don’t have to be poor to have bad credit. Many people who have a good income get into debt by living a lifestyle beyond their means. Some of the people with the fancy houses can’t afford to have furniture, or are in debt up to their necks. Their credit rating has become a serious issue because they are keeping up appearances rather than slowly getting what they want by making good financial decisions.

The best way to keep your credit score from going down is to live within a budget. Sit down and honestly look at your income. Balance your income and the amount of money you spend each month. Make any adjustments in your lifestyle necessary to make your budget work. Once you understand your budget, contact a reputable company for a credit score. Take a good look at the sources of your score to ensure that there are no errors on the credit report.

Check with your creditors. If you are already behind in payments, call them and see what can be done to help you get caught up. Many creditors are happy to work with you to get your payments caught up and improve you credit score.

If you are in debt, you didn’t get their overnight. You won’t get back out of debt overnight. Make a budget and stick to it. You can work and plan your way out of debt and into a high credit score.