The Impact of a Bad Credit Rating on Your Life
A bad credit history can affect your financial situation in many ways. One way it could impact you is by increasing the interest rate you pay on any new approved loan.
Once you have a bad credit rating, it can be very hard to clear as many defaults, judgments and acts of bankruptcy can remain on your file for up to seven years. Delinquent payments to credit companies late by at least thirty days will be recorded on your credit file. Even once these debts are paid, they remain on your credit file.
Some companies check the credit history of a prospective employee before making a hiring decision. Such employers gauge responsible behaviour and trustworthiness in terms of credit history. Those with poor credit histories can lose job offers especially if the job involves handling cash or expensive items such as jewellery, payrolls or financial portfolios.
A number of vehicle insurers also assess credit histories to determine insurance rates. Drivers who have poor credit ratings end up paying higher premiums. Most insurers view people with bad credit histories as high risk clients because they are more likely to file insurance claims.
Living with a bad credit score can be quite stressful because of all the problems which may arise as a result of bad credit. Improving your credit rating requires you to take positive action and a change of attitude towards money.
The Road to Bad Credit Recovery Involves the Following Steps:
- Request a duplicate of your credit report from a credit bureau. In case of any errors, write to the bureau and ask them to fix the mistake. It also helps to contact the creditor who caused the error. Certain creditors may even contact the bureau on your behalf.
- If the credit report has bad marks as a result of outstanding debts, pay them as soon as possible. The pay-off should be done systematically by clearing the debts with the highest interests first.
- If the debts are overwhelming, contact Revive Financial. Our Case Managers can help you figure out a plan to repay your debt. Revive Financial could suggest debt consolidation and will contact creditors on your behalf. This eliminates finance charges and will result in a considerable reduction in monthly repayments.
- Cut up your credit cards, pay off the debt and close the accounts. Sell valuable assets and use the proceeds to purchase essential items while leaving off the rest to pay off your debts.
- Work with a Revive Financial Case Manager to assist you with debt repayment. In the meantime live within your means and lead a lifestyle which will facilitate the debt repayment. Pay rent and other bills promptly and keep the same job and house. Maintain savings accounts and make a practical budget which should be followed to the letter.
- Once all your debts are repaid, apply for a new credit card. Use the card responsibly while at the same time making prompt monthly payments off the credit card. This should help to establish a good credit score as time goes by and your defaults begin to clear. At first it may be easier to get credit cards for a department store or employee union credit card. If you don’t think you will be able to afford the repayments, do not get a new card.
People are advised to get annual copies of their credit reports even when they think they have good credit. The reports may have errors which may damage credit ratings.