Bad Credit Can Hurt in Many Ways

We all know that bad credit will cause you to pay higher rates on credit cards, mortgage and car loans, and may even cause you to be turned down for credit. But few people realize there are other ways a low credit score can hurt.

Here are just a few of the ways bad credit can count against you:

• Car insurance. Insurance companies use your credit score to determine both your initial eligibility and what your premium will be. The lower your score, the higher the premium.
• Job applications. 70% of companies say they run a credit report on job applicants before they hire them, and bad credit can cause you to be turned down for a job.
• Car loans. Not only does a low score force you into a higher rate, but you might even pay more for your car. A recent study by the Consumer Federation of America found that buyers with low credit scores paid an average of 3.5% more for their car than did people with better credit.
• Utilities. Many people are surprised to learn that utilities check your credit before extending service. Bad credit may cause you to have to put down a hefty deposit before service starts, where no deposit will be required for those with good credit. You see this also with cell phones and cable TV providers.
• Elective medical procedures. If you have a medical procedure that is not covered by insurance, bad credit may cause you to have to pay your bill in full, rather than being offered a monthly payment plan.
• School loans. Bad credit can cause you to be turned down for school loans. And here there is no option. You are either approved or denied.

As you can see, it is very important to have a good credit score. Check your credit report annually at www.annualcreditreport.com to make sure there are no errors, then make a commitment to pay your bills on time and be careful how much debt you take on.