If you have ever been in the unfortunate situation of having bad credit, then it is likely that has been an important reality check for a variety of reasons.
While having bad credit is certainly not a place you want to find yourself in, it also can be seen as an opportunity to learn from your mistakes and what is a more appropriate way to manage your credit moving forward.
Here are 3 lessons you can learn from being in a Bad Credit Situation.
1) Bad Credit can Limit your Loan Opportunities
While experiencing bad credit, it is likely that you may have learned first hand how challenging it can be to obtain a loan of any kind. This is due to the fact that lenders and creditors will look at your credit score and your debt level and perhaps decide that you are a high risk borrower. Translation, you may not be able to pay back your loan and therefore they will not opt to lend you any additional credit at that time.
Ultimately, the approval rate for borrowers with bad credit is lower – and even in the event you are approved for a loan, you are more likely to walk away with a higher interest rate as well a less favourable term.
Think mortgages. Think car loans. Think credit cards. All of these types of credit will be more difficult to secure with bad credit – and this can and may have impeded any one or more these important financial goals.
2) Bad Credit can Make it Hard to Rent an Apartment
If you have been looking to rent an apartment versus buying a home, another harsh reality that you may have encountered is that you may not have been able to become a successful renter either. This is often due to the fact landlords are more likely to rent to tenants who can consistently pay their rent. With a bad credit score, this may pose a problem for certain individuals and when it comes down to it, and many landlords will be hesitant to rent to anyone they do not have financial confidence in.
In particular, some landlords will pay close attention to potential tenants who have a history of making late payments. This can provide a glimpse into what a future tenant-landlord relationship might look like – and again landlords may not want to take a chance on a tenant with bad credit for reasons like these.
If you have tried to rent a place to live and have not had a successful go of it, then this is yet another reason to keep doing all that you can to maintain a good credit score. As you can see, this lesson is another important one to learn and it can significantly impact your ability to find somewhere to live.
3) Bad Credit Can Affect Your Relationships
Another noteworthy way that having bad credit may have also affected your life in a negative way is by placing stress on your relationships. Unfortunately bad credit and stress typically go hand in hand – and stress can make your day to day life a lot more challenging. If bad credit has affected you in this way, then you may also have struggled in some way regarding your relationships with family members, friends, and in particular your significant other.
Not only is it the stress and your overall frame of mind that can put a strain on your relationship, but it can also mean that having bad credit can affect your partner’s access to credit as well. If for example, together your goal is to buy a home, yet your bad credit is making loan approval difficult, if not impossible, this can also place even more stress on your lives.
In the end, this type of bad credit scenario not only has the ability to damage relationships, ultimately it can also mean that your financial goals may have to be put on hold temporarily – if not forever.
While not all of these situations may be ones that you have to deal with, the overall message here is that having bad credit can lead to many unwanted realties. Hopefully however, these hard lessons are not necessarily ones that you have to learn from – it never hurts to be aware of these potential outcomes none-the-less.
On the other hand, if you have encountered one or more of these – perhaps you can learn from them and take steps to improve your credit as well as do everything in your power to keep your credit at a manageable level.