The Consequences of Bad Credit

It is true that with time and effort you can recover from having a bad credit score. That being said, there are quite a few aspects of your life that can and will suffer from managing your finances poorly and lowering your credit score in the process.

A low rating of credit or bad credit scores from the three credit bureaus can have a negative effect on nearly every aspect of life as you know it. It doesn’t matter if you are consistently late with making your car payment, or if you happen to be over your limit with regards to your credit cards, having bad credit can make buying anything with credit nearly impossible and it can also have very limiting effects on your lifestyle.

Harassment from Debt Collectors

Having bad credit on its own does not necessarily lead to debt collection and the nonstop calls that go along with it. However, the chances are good that if you have a bad credit history, you will also have at least one bill that is past due. This will lead to you being harassed by debt collectors calling you on a nearly daily basis. You can avoid this by making payment arrangements with the company that you owe before the debt goes to a collection agency.

Getting a Loan

Having a bad credit score can have a direct effect on your ability to get a loan of any kind. Think specifically of car or mortgage loans. If you are attempting to purchase a car or a home, you will more than likely need to apply for a loan. You can bet your bottom dollar that the financial institutions will be taking a look at your credit score in order to determine if giving you a loan will be risky for them. Even if you are not flat out denied for a loan, you might end up with an interest rate that can make repayment of the loan a financial nightmare. The worse your score is, the higher the risk you will be and the higher your chances of landin an unreasonable interest rate or being denied immediately.

Speaking of Domiciles

Did you know that having bad credit can also mean that you can be denied for a lease on an apartment? So, having bad credit can keep you from buying a home and leasing or renting an apartment. Where does that leave you? It could be on the street. As you can see, having a decent credit rating can be essential for a decent lifestyle.

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Even if you can get into a house or an apartment, you will still need to have the utilities turned on. These utility companies will check your credit score during the process of approving your application. If your credit score is bad, you will more than likely need to pay a deposit in order to get the services established, even if your utility bills have always been paid right on time in the past. This security deposit typically has to be paid up front before the service will be connected.

Cell Phones

Cell phone companies can also be relied upon to check your credit. Their reasoning is that they are giving you a month of phone service, so they will need to know that you will be reliable enough to pay for that month after you get it. If you have bad credit, you might have to get one of the prepaid phones that have a month to month type of contract. This means that the phone will cost you more. Or, you could always just not have a cell phone at all. If you decide to make payments or are leasing your cell phone, your payments will typically be higher if your credit is bad.


There are certain jobs, such as those in upper management or just about anywhere in the finance industry, that will require you to have good credit. You can absolutely be denied employment because you have negative items on your credit report. This can include things like high amounts of debt, outstanding bills, and even bankruptcy. Employers will do more than simply look at your credit score too, they will look at the actual report to see if there are things that can affect your performance at work.

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. You can add insurance rates to the list too, James! We have our credit frozen to prevent fraud and I have to unlock it to get a landlord policy switched to a homeowner’s policy. The owner of the agency said that people with bad credit pay much higher homeowner’s rates too. How will they ever get ahead?

    • “The owner of the agency said that people with bad credit pay much higher homeowner’s rates too. How will they ever get ahead?” Unfortunately, I often think they don’t. It seems to me that those who get caught up in a cycle of low income and high debt have a nearly impossible time of breaking free. Too often the decisions they make (e.g. utilizing payday loans) to overcome an issue in the short-term becomes a long-term problem with cascading impacts.

      Thanks for stopping by and sharing your thoughts, my friend.

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