Effects of Bad Credit and Legal Considerations
Provided by HG.org
Negative credit can have many far reaching consequences. Although you may not realize it, the health of your credit history will determine whether or not you are suitable for all sorts of things, including basic needs like renting an apartment or getting a job.
Bad credit can come from many places. If you have a lot of debt, and have poor records with paying your credit cards, car payments, home mortgage, etc., these will all contribute to a bad credit score. If you do not try to repair your credit, the “bad” aspects of your rating will show up for 7 years. In some circumstances the bad credit can stay on for up to 10 years. Consequences of bad credit can include:
Small Business: If you ever decide you want to start your own business, you will almost certainly need access to credit to assist with setting up or to fall back on in the event of cash flow difficulties. Bad credit will prevent access to these funds.
High Interest Rates: Any credit you may obtain will likely be at a premium. You will generally pay much higher interest rates than those with normal or excellent credit because lenders will view you as a riskier debtor.
Utilities. Bad credit will affect the provision of utilities such as phone, cable and electricity because your credit is checked when you sign up for these as well. You may have to pay deposits or have a co-signer to guarantee that you will pay the bills. Bad credit also means you may have troubles signing up for cell phone service, which is often based on creditworthiness, as well.
Housing. Landlords also conduct credit checks before renting property to their tenants. Again, this could lead to deposits or higher rental rates or an inability to rent at all. Similarly, one may be unable to obtain a mortgage to purchase a house or, if they can, the rates may be crushingly high.
Money problems are stressful and can lead to other problems. Fortunately, there are ways to get out of this situation. The best approach is the slow-and-steady method of credit repair in which you catch up delinquent payments, pay off balances, and reduce debt. The faster approach is often to declare bankruptcy, but this creates other problems including a record entry that shows the bankruptcy for 10 years. The best option is to contact an attorney familiar with credit repair. They may be able to negotiate reduced pay-off amounts on your debts, extend repayment periods to reduce individual payments, or, in the worst cases, help you through the process of filing for bankruptcy.
Copyright HG.org - Google+
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Small Business: If you ever decide you want to start your own business, you will almost certainly need access to credit to assist with setting up or to fall back on in the event of cash flow difficulties. Bad credit will prevent access to these funds.
High Interest Rates: Any credit you may obtain will likely be at a premium. You will generally pay much higher interest rates than those with normal or excellent credit because lenders will view you as a riskier debtor.
Utilities. Bad credit will affect the provision of utilities such as phone, cable and electricity because your credit is checked when you sign up for these as well. You may have to pay deposits or have a co-signer to guarantee that you will pay the bills. Bad credit also means you may have troubles signing up for cell phone service, which is often based on creditworthiness, as well.
Housing. Landlords also conduct credit checks before renting property to their tenants. Again, this could lead to deposits or higher rental rates or an inability to rent at all. Similarly, one may be unable to obtain a mortgage to purchase a house or, if they can, the rates may be crushingly high.
Money problems are stressful and can lead to other problems. Fortunately, there are ways to get out of this situation. The best approach is the slow-and-steady method of credit repair in which you catch up delinquent payments, pay off balances, and reduce debt. The faster approach is often to declare bankruptcy, but this creates other problems including a record entry that shows the bankruptcy for 10 years. The best option is to contact an attorney familiar with credit repair. They may be able to negotiate reduced pay-off amounts on your debts, extend repayment periods to reduce individual payments, or, in the worst cases, help you through the process of filing for bankruptcy.
Copyright HG.org - Google+
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
