A bad credit score can not only keep your interest rates hiked up and your insurance through the roof, it can also strip you of the financial freedom and security that you've always wanted. This kind of freedom will make buying and saving easier. The positive impacts of a good credit score may seem like a long way away when you are plagued by the negative impacts of a bad credit score.
With your negative credit score, the housing market will not be as available to you as it is to the rest of the general population. When your credit is hovering between 500 and 580 - or, even worse, below 500 - you may not have the freedom to even think about the house or the condo that you have your eyes set on. Even if you can afford to make the monthly payments for your mortgage or that dream piece of property, you may not have the chance if your credit score is not deemed high enough. With a low credit score toiling around 400 or 500, banks and lenders will be hesitant to give you the money to get that house or condo up front.
If, however, you do get approved for a dollar amount for your dream lodging, you might still see your bad FICO score wreaking havoc on the way that you are paying for it. With a lower credit score, you will be negatively impacted when you end up paying hundreds of dollars more in interest than you might have otherwise if you had a better score. A good FICO score will not only make your dream house more realistic, but it will make it more affordable and more enjoyable as well. This situation can make moving from one place to another difficult to impossible, and it can strip you of job, family, relationships and future plans that you want to guide your life in the right direction.
If you do get that house, and even if you squeak out a decent interest rate, the negative impacts of your bad credit score will likely manifest themselves in other ways. When you have a bad FICO score, you might find yourself making everyday purchase on your credit cards, and accruing large balances on these cards. While this reality is OK for some people, it can draw you into paying interest rates of up to 25-percent on daily or weekly purchases like gas, food and the money that you are paying on your bills.
The negative impacts of a bad credit are too many to be considered in one aspect of your life or of your financial future.. When you have a negative credit score, it may be difficult to open new credit cards, secure new bank accounts and even get checking and banking accounts with favorable terms. You might find yourself paying per transaction, or heaped with large fees on a number of feature at any bank that you try to sign up for. All of these negative impacts can add up very quickly, and can make it impossible for you to extricate yourself from the cycle of bad credit.
Rachel Wink is a credit repair specialist who writes about current personal finance issues affecting many homeowners during this economic downturn.