Thursday, February 27, 2014

How A Negative Credit Report Can Affect Your Financial Future

A negative credit report has long-term consequences. It can affect nearly every part of life from employment to insurance rates. Poor credit can prevent a person from accessing many of the financial tools that make saving or planning for the future possible. A negative credit report can affect the financial future of anyone in several ways.

Housing Is Difficult To Get

Anyone who has a poor credit report will have a difficult time acquiring housing. Property managers are not likely to rent an apartment to someone who has a history of unpaid debts. Banks might also deny mortgages to these same people. While some people may think that buying a house is too far in the future to matter much, it is important to remember that bad choices with finances now can stick with you for a long time on credit reports. One of the only solutions is to find a guarantor who can cosign a lease or mortgage. A cosigner can allow an individual to start building a positive lending or rental history.

Credit Becomes Inaccessible

A negative credit report will make getting any type of credit in the future very difficult. This includes loans, credit cards and financing for a car. Without loans and credit, it becomes nearly impossible to eventually get the items you may need for your family, like a house or car. Talking to a professional to help get back on track financially will improve credit. Some professionals can even work to remove bad marks from credit reports. Rebuilding credit could also involve using secured credit cards backed by cash deposits.

Limited Employment Options

An increasing number of employers are checking the credit report of applicants during the hiring process. A bad credit report could prevent an individual from getting a job working near sensitive financial information regardless of other qualifications. Counteracting this negative effect will require establishing good credit with the help of financial professionals while working in positions that do not require accessing financial information. 

Higher Insurance and Interest Rates

A negative credit report will lead to higher insurance rates, which include car and home insurance. One way to counteract the higher rates is to decrease risk in other areas. This could mean taking defensive driving courses, installing a home security system or installing new vehicle tracking systems. These steps will lower insurance rates. Interest rates will also increase with a bad credit score. This can be very detrimental to many families because interest builds so quickly and can become almost impossible to pay off over time. 

Utilities and Service Plans Become More Expensive

Getting any type of service plan for a cell phone or a utility will be more expensive with a negative credit report. Some companies might just refuse to provide services billed monthly or quarterly altogether. A cosigner could solve this problem. Another solution is to ask about or offer an initial cash deposit to cover multiple months of service in advance.

A credit report needs to be checked regularly and repaired or improved whenever possible. This can sometimes take a long time. Anyone with credit problems should take action immediately to start building good credit and repairing the report.

Informational credit to A C Waring & Associates Inc

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