Bad Credit: The Real Impact

Bad Credit: The Real Impact

For those who are new to the responsibility of managing their own money, it may seem that the endless loans you can get your hands on, and the action of simply ignoring your bills is a recipe for success when it comes to getting what you want. However, besides the fact that you could be getting a visit from a bailiff who can legally take your possessions as repayment for your debts, what you don’t realize is that in the background your credit score is getting lower and lower, and this could have disastrous consequences for your future.

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A low credit score acts as proof that you are not a reliable person to lend to, as it is highly likely that you will not make your repayments. Your credit score will be checked whenever you apply for something that requires regular payments, and as much as you try to stick to only paying in full for things, there are certain essentials that you cannot avoid. For example, when it comes to housing, you will either need to rent a property or apply for a mortgage in order to buy one. Either way, you will have to go through credit checks and you are likely to be turned away. Even if you have the cash to pay for a few months rent upfront, you may still be turned away as you cannot promise secure future payments. Unless you can afford to buy a house outright, you’re going to struggle to find somewhere to live with a bad credit score.


Another essential for most people is owning their own car, and if you don’t have the lump sum to pay in full upfront, you will need to opt for the hire purchase option. This is likely to be the case if you cannot afford to repay your debts. However, if you have a bad credit history, no car dealer will see you as a profitable option and you will be turned away. It is the same for any kind of hire purchase agreement such as appliances and furniture.

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If you’re in the habit of taking out loans rather than saving and paying off your debts, you will reach a point where you run out of lenders who are willing to ignore a bad credit history, and your cash flow will grind to a halt. Take a look at this article for more personal finance advice including how to make money and how to look after it once you have it.

Being irresponsible when it comes to your finances is a one-way ticket to a life of anxiety and worry. If you do have to borrow money, make sure you will always be able to afford the repayments, and read a simple guide to credit cards to see how they can be the most beneficial form of loan due to their potential to positively impact your credit history. Planning for your future and budgeting according to what you can afford is the best way to avoid financial difficulty.

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