How does BAD Credit Affect My Finances? How can I Rebuild My Credit?

How does bad credit affect my finances?

Individuals with bad credit find it much more difficult (and often impossible) to be approved for loans, credit cards, mortgages, or even accounts with utility companies. Because approval is difficult to obtain, the individual must save more cash before being able to afford things like a house, a car, phone service, or tuition.

When those with bad credit are able to gain approval for loans or other lines of credit, they can often expect higher interest rates and higher payments than those with good credit are typically afforded.

How can I rebuild my credit?

The most important step to rebuilding your credit (or avoiding bad credit to begin with) is to always pay bills on or before their due date. This includes credit cards, mortgages, car loans, personal loans, medical bills, utility bills, rent, or any other financial obligation you have that may be reported on your credit history.

Aside from paying bills on time, reducing your debt is also an important step in rebuilding your credit. If you owe a lot of money on credit cards, for instance, paying down those balances can help improve your credit profile.