Bad Credit Report

Bad Credit 101: Why It Matters and How to Keep a Good Record

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Borrowing money from the bank to spend on investments or pay for an emergency isn’t as easy as it looks. You cannot just walk into the bank and expect them to hand you money as if they were giving it away. Before they entrust you with the amount you’re asking, they need to check if you can give it back within a certain period. It involves checking your credit score.

Your credit score will indicate how you perform with paying your bills and previous loans. However, if you usually settle your bills late or owe too much from your credit bank, it’ll already be considered bad credit.


Effects Of Bad Credit

While having bad credit might feel neutral to you, you must wait until you ask for a loan or even deal with important things and see how it can harm your future. Moreover, listed below are some effects of bad credit:

Difficult For Loan Approval

If you need to ask the bank for housing, auto, or personal loans, you might need to prepare yourself for plenty of rejection emails with your bad credit score. Before a bank can hand you out their money, they need to check if you’re capable of paying it back without causing any trouble or headaches on their end. If your usual activity usually involves not paying your credit card or utilities on time or even not paying them, it’ll leave a bad impression on the loan shark. They might interpret this as you’re not handling your finances well and having trouble paying them back, as stated in your contract.

Fewer Rental Choices

Landlords are now more meticulous with their tenant choices these days as they need to ensure that they’ll pay them back just in time. One of the most neglected bills for those with a bad credit history is not paying their rent on time and usually asking for an extension. To keep them away from trouble, a landlord might ask for a credit report to see your activities. It should give them an idea of how you pay for your bills and see if it’ll be something they’d be comfortable with. However, with a bad credit score, you might end up with fewer rental options because landlords don’t want to hand out their keys to someone who doesn’t have a good payment history.

Pay For Deposit

If you need to set up utilities inside your home, you might need to pay for deposits if you have bad credit. The utility company will check your credit report and see if you can pay them on time. However, if your credit activities show that you don’t, they might ask for a deposit that will act as your insurance bond with the utility provider. It’ll involve paying for your household utilities, including your internet connection.

Less Phone Provider Selection

Subscribing to a plan for your phone might be more challenging with a bad credit score. Not only will you be limited to a low-deal option, but you might also be asked to switch to a prepaid plan. Alternatively, some phone providers might request a deposit if you’re eager to get a better plan for your phone.

Limits Job Options

If you’re applying for a job related to handling money, the company might need to check your credit score to see if you]re trustworthy in making financial decisions for the company. A bad credit rating might affect your character and your potential for an interview. Not only does having bad credit affect how you ask for money, but also how you can earn it back.


How To Improve Your Credit Score

Since bad credit can negatively impact your lifestyle, you must look for ways to restore your credit score]s health quickly. Even if you don’t need to ask for a loan right away, improving your credit score can make things easier in case you need one soon. With that, listed below are some ways to improve your credit score:

Check Credit Report

One of the first things you should do to improve the health of your credit score is to check your credit report. It]ll give you an idea of why your score is low and what you can do about it. Ideally, you must do it through a soft inquiry to avoid damaging your credit score. It means that you or your current creditor will personally check your credit score by reviewing your latest credit activities. It is also a great time to see if you need to do side hustles to pay off your debts and start with a clean slate.

Pay Your Bills On Time

Paying bills late can hurt your credit score, especially if you usually send your payments past your due date. But even if you feel confident that you’re paying your bills within the last minute or the day before your due date, it can still negatively impact your credit score. Ideally, you should settle your accounts immediately as soon as you receive them. It means you can handle your finances effectively and won’t have to worry about deadlines.

Apart from waiting for your bills to arrive, you can set up automatic payments on specific days of the month, so you don’t have to worry about forgetting to pay your bills. Alternatively, you can always set up an alarm on your phone during your usual free time so you can take charge and pay your bills right away.

Don’t Max Out Your Cards

Even if your credit card has a high credit limit, you should never max it out. Ideally, you should only be using 30% of your credit card to avoid hurting your credit score. If you frequently max out your cards, it might mean that you’re a high spender, which is unhealthy for your credit score. However, if you’re using a credit card for everyday payments, you might want to ask for a higher credit limit to keep them within the 30% range.

Limit Account Application

New credit cards provide plenty of amazing offers to their consumers. But if you don’t need to open a new one, you should avoid doing so. Applying for new accounts can hurt your credit score, even if you’re not using them, as it’ll still be an added responsibility. To avoid damaging your score, you should learn to utilize what you already have.



Bad credit can negatively impact your life as you cannot easily borrow money from the bank. Moreover, it might also limit your utility application along with finding yourself a better-paying job. But with the right practices, you should be able to enhance your credit score and allow yourself to live a comfortable, debt-free life!


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