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5 Ways Your Credit is Holding You Back

  • By Credit Diva of Dallas
  • 31 Mar, 2018

You work hard, and you pay your bills on time. You’re ready to stop renting, or perhaps you need a new car, but your past credit mistakes are driving up your interest rates. You’re looking for a new job, but are passed over, and you don’t know why. Many of us have been held back by past credit mistakes—are you?

Dings on your credit report last for years. Great creditworthy behavior after a mistake isn’t always enough to allow you to move on and put it behind you. Here are five ways your credit is holding you back.
Stressed businesswoman sitting at her desk in the office

High Interest Rates 

Consumers with great credit get prime interest rates, such as when buying a home. Prime interest rates are the lowest rates the bank offers, but to get them, you need stellar credit. Subprime interest rates are the high interest rates that come with credit scores that have seen better days. How big can the difference be? Interest rates on home loans can be a full 5% higher  (or more) for subprime borrowers.

Hidden Fees

Lenders want to be sure that they recover the money they borrow, and a low credit score means you are high risk to lenders. To offset potential losses, creditors will up the price of fees associated with getting a loan or line of credit. Monthly fees, application fees, origination fees, etc. are all sometimes higher  for borrowers with a lower credit score.

Missed Job Opportunities

You might not think of an accountant as someone who would have less than perfect credit. Don’t forget that cosigning the wrong loan, a divorce, identity theft and more can lead to a low credit score. For people who work in financial positions or other areas where there might be a high risk of theft, some employers will only take on applicants with great credit. They see the high debt that can accompany bad credit as a high risk of losses. Why take a chance on that employee when they could hire someone whose credit gives them better peace of mind?

The Cost of Low Quality

You get what you pay for has become a colloquialism for a reason. Some products that come at a discount price don’t last, or work right, causing you to have to continually buy a replacement or fix that very low budget car once per month, eventually costing more than starting out with quality that will last from the start. How does that relate to credit? When you don’t have great credit and an appliance breaks or other high price items, you might not be able to replace it with a quality item if you can’t get financing, leading you to the more expensive cycle of poor quality products.

Missed Opportunity

Great credit opens doors. Rental car doors to be exact. Major US car-rental companies require a credit card, not a debit card, to rent a car. Hotels place holds for incidentals on debit cards that restrict access to your checking account funds for days. Add this to the higher cost of most everything when you have bad credit and vacations, even reasonably priced family vacations can quickly become out of reach.

These are just some of the ways that your credit could be holding you back. Negative marks can remain on a credit report for up to seven years. If you’re struggling with bad credit, having an ally on your side that knows how the credit reporting bureaus work can help you repair your credit faster. As always, be sure to always make your payments on time, and regularly check your credit reports to ensure that identity theft is caught right away as well.
Ready to get started? Download our free checklist of steps you can start taking today to fix your credit, then call Credit Diva of Dallas!
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