Life Credit Cards

Good credit means a lot of different things to different people. The advantage of having good credit are many and are fairly self-evident. You need to make payments and manage your money well to get good credit, but it is better than the alternative; bad credit. So what is bad credit and just what does having bad credit mean to a consumer? This is a complex question with a complex answer.

Lenders and credit card companies use what is called a FICO score to decide if you are eligible for any kind of financing. A score which is 720 or above is considered to be excellent and will enable you to qualify for nearly any kind of loan you request. A score of 650 or lower is when you may begin to face difficulty.

It is the “big three” credit reporting agencies who calculate your credit score. These companies are Equifax, TransUnion and Experian.

Financing opportunities A bad FICO score will prevent you from obtaining financing in every market. Try obtaining a mortgage to buy a house and you will be hard pressed to get that loan. The same thing applies to personal loans and car loans. Basically, a bad credit history tells lenders that you are a high risk and can’t be trusted or are otherwise unable to pay the loan back in a timely manner.

Interest rates The real problem with a bad credit history is higher interest rates.

The FICO score is also used to determine the interest rate you will be eligible for. A good score can get you in the door at a relatively low rate like 7% or 9%. You may be able to get financing but will pay a much higher interest rate as a result.

I had one experience where I was trying to consolidate a few bills into one payment. My credit score wasn’t what it should have been and my interest would have moved from 11% toget ready for this24.99% per annum. That is an astronomical rate of interest and you will end up paying $25 per $100 of your annual ending balance. On a balance of $1000, that adds up to $250 a year!

Personal health and well being The financial ramifications of having bad credit are bad enough, but there are other things to consider. If you have bead credit, you are probably already in debt. You may be getting mail from creditors or even harassing phone calls from collectors. This creates stress and strain on even the hardiest of people.

The results of this can be loss of sleep, loss of appetite, depression, headaches, stomach trouble and a host of other stress related maladies. All related to your money problems. Yes, your financial situation is important, but so is your physical well-being.

Conclusion Having bad credit can hold you back in almost every aspect of your life. Buying a home, getting loans for college expenses; whatever it is -it may be a struggle to get financing. We all want to have something nice for ourselves, but having bad credit can keep you from being able to.

Having bad credit can also have a negative impact on your health, causing a lot of difficulties. High blood pressure and heart attacks can even be caused by stress, so make sure to guard your credit and take good care of it – and yourself.

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