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What Happens when you have Bad Credit?

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No one wants to have bad credit. Often it’s a case of life getting in the way, or simply forgetting to pay a debt. When I was 18 banks were handing out credit cards like they were candy, and at that age, we all treated it as “free money” just paying the minimum payments and putting large purchases like TV’s and sometimes even cars on our cards.

Almost ten years later, and I narrowly escaped having my credit rating being effected, as I had forgotten to pay a card, focusing on paying back a card with a higher interest rate, and as I had moved house and forgotten to pass on my new address the bank had no way of contacting me with the scary “pay now or else” letters.

I was told the debt had gone to the debt collectors, and luckily they gave me one month to pay it back before it effected my rating, and I managed to do it with the help of an inheritance.

I have friends who are $20,000 in debt, and haven’t been able to have the experiences that I’ve been lucky enough to have, including travel, living overseas, and knowing my credit rating is still good enough that if I want I can buy a house someday, or get another credit card.


Bad credit can greatly change your life, and make it a lot more difficult. You may be denied credit, since a low credit score tells potential lenders that you’re high-risk and may not pay the money back within the agreed terms. If you do get approved for credit, you may find that it’s a lot more expensive. You can expect to pay higher fees, as well as higher interest rates, increasing your monthly payments.

You may find that your car insurance is more expensive, since insurers will often check your credit score when they’re deciding how much you’ll need to pay. If your credit rating is really bad you may not even be approved by some carriers, and could find yourself having to shop around for insurance.

If you want to get a car loan you’ll find that the same thing applies, and your credit score will be checked before the bank approves the loan. This will mean that your interest rates could be up to two percentage points more if you have bad credit.

Some cell phone carriers, internet providers, and electricity companies also check your credit score, which is why it’s so important to have good credit.

Future employers can review your credit report when they’re trying to decide if they’ll hire you. This can seem unfair, however people justify it by saying that they’re looking at your “character”. If you ever want to start your own business you could also find it touch to get a bank loan, so even if you have an amazing idea you might not be able to get the money to make it a reality.