How a Bad Credit Score Can Ruin Your Life

Everyone knows that a bad credit score is a bad thing. Duh. But not everyone knows why. But I believe that if you see the reason for something, you’ll be more likely to behave. For instance, if someone tells you not to eat Doritos, you’ll still eat them because they’re tasty. But if someone tells you not to eat Doritos because they will make you gain weight, now you have a reason to put down the chips.

girl-517555_640

Everyone I talk with know they should have a high credit score. But few really understand or appreciate why. This post will clarify. This post will explain many of the negative outcomes that can occur as a result of a poor score.

Higher Monthly Bills

Yes, your phone, internet and television bills can be higher – or any other bills for that matter. Many of these companies charge using risk-based pricing. This is perfectly legal. Basically, if they think you may become a liability, they charge you more. What can happen is that the company you use can flat-out send you a risk-based pricing notice with a bill for an extra, say, $10 per month. Talk about an obvious reason to boost your credit score. You can see exactly how much a poor score is costing you.

Mortgage Time

The purchase of a home will probably be the largest purchase of your life. With that said, you want the best deal possible. But with a low credit score, that will not happen if you get a mortgage. While you can get an FHA loan with a score as low as 580 (or possibly even lower based on an individual assessment) – it won’t come cheap. A lower credit score will cost your tens of thousands of dollars over the length of the loan. Tens of thousands.

Insurance

Your insurance may also be higher if you have a poor credit score. Insurance is really just like any other bill. If the company thinks you may flake out on them, they will charge you more. This applies to all sorts of insurance categories: home, auto, life…

Job Opportunities

Probably every large employer runs a credit check. I know when I worked for a Fortune 500 company, they ran my credit. Think about it like this. A credit score is the closest thing we have to a financial report card. Employers want to know how well your finances are doing. If they are poor, that stress will no doubt find its way into the workplace. You could constantly be getting calls from creditors throughout the day, you may be tempted to steal money from work, you could be too stressed from your personal money problems to be productive at work…

All of This Compounds

Those with a low credit score go through life paying more than everyone else. It sounds unfair but that’s just how it works. Those who can barely afford something are often those that will pay the most. It’s kind of like how it often takes money to make money.

This is why I watch my credit score closely. I don’t want to overpay for anything. I want to spend as little as possible on things – especially with things such as fixed costs like a mortgage payment, cell phone bill, car insurance, etc. I believe that getting your monthly bills as low as possible is a large majority of what needs to be done in order to become rich. Saving a buck or two here and there is nice – but getting your monthly bills down… that’s a gift that keeps on giving month after month.

What’s your credit score? A good rule of thumb is to make sure it’s at least 740. A 740 credit score is the credit score needed to buy a house at the lowest price.

Join our newsletter

If you like Critical Financial, subscribe and get our latest content via email.

Powered by ConvertKit

Share this post:

Recent Posts

Leave a Comment

*

People count the money to buy a house in future success.

Avoiding Mortgage Scams: Don’t Fall for Unreasonable Promises

If it sounds too good to be true, it probably is. That’s sound advice for almost all aspects of life, including the search for... more →
Eat for free for a whole month via the meal kit companies discounts for new customers.

How To Get a Month of Free Food: 9 Meal Kit Companies Offering Discounts to New Customers

Play your cards right and you might be able to line up a month’s worth of free meals if you were to try out all nine of the meal... more →
Generate extra cashflow -- here are 97 ways.

96 Awesome Ways to Generate Extra Cashflow

Who doesn’t want more money nowadays? We’ve got you covered on that front. Here comes a long list of different ideas on... more →
Valentine's Day gifts that won't destroy your budget

Valentine’s Day Crafts Are Romantic Rescue from Crazy Inflation

Fall for the hype this week and you’re out an average of $143.56 for Valentine’s Day. Crafts and other do-it-yourself tactics... more →

Ultimate Guide to Bitcoin — FREE Ebook!

Have we got something for you: a free ebook about bitcoin! more →
Get a flu vaccine.

Why You Need To Get a Flu Vaccine Right Now

Flu vaccines aren’t just for the elderly  anymore. Here are 25 reasons you should go get vaccinated. more →
Financially successful

Acquire the Trait All Financially Successful People Have

Financially successful people tend to all have a lot of self-discipline. Improving your discipline in one area of your life often spills... more →

What’s the Best Free Recipe App?

The Apple Store and Google Play together offer more digital cookbooks than you probably have room for on your mobile device. So which... more →
New tax law might slow down housing market.

What Will the New Tax Law Do to the Housing Market?

The new tax law will have a profound impact on the housing market, although in ways that go beyond the deductibility of mortgage interest... more →

4 in 5 Households Will Get a Tax Cut in 2018

Four out of five U.S. households will get a tax cut as a result of the legislation that President Donald Trump signed into law today. more →
Will bitcoin reach $100,000?

When Will Bitcoin Reach $100,000?

Bitcoin has accelerated its pace of appreciation in recent months, and if the current levels between $15,000 and $19,000 make you itch... more →
The Dow Jones topped 24,000 -- now what?

The Dow Jones Crossed the 24,000 Threshold. Now What?

Stocks appear to be increasing in volatility, yet the markets closed on Monday, December 4 with the Dow Jones Industrial Average is... more →
Peer mortgage

Should You Get a Peer-to-Peer Mortgage?

If you can’t get approved for a home loan from a bank, you might want to look into applying for a peer-to-peer mortgage. more →
Investment gifting is awesome.

4 Things To Know Before You Donate an Investment

While donations of any kind are appreciated, gifting investments benefits both the giver and the receiver. Here are four key things... more →
Are you wondering: What's the Relationship Between the Stock Market and Federal Debt?

What’s the Relationship Between the Stock Market and Federal Debt?

Wouldn’t it be wonderful if gains in the stock market could actually reduce U.S. government indebtedness? If that were true,... more →
Federal Student Loan Subsidies

Federal Student Loan Subsidies | Part of The Health Care Law?

As I drive through Any College Town, USA I notice an above average amount of urban sprawl, which has occured in the last 5 to 7 years. ... more →