For many people, bad credit started following them around before they even really knew what credit was. Because credit card companies tend to prey off of young buyers at first, without knowing the ins and outs of debt, you can end up in a black financial hole before you even turn 20, and it can stick with you for a long time depending on your eventual income level.
And that bad credit can turn into situations where you have to work harder than you would otherwise in order to absorb certain benefits into your lifestyle. Think about the situations of buying a car, renting an apartment, getting a school loan, or starting a business – all of these activities are going to be significantly more difficult if you have the bad credit albatross hanging around your neck already.
Buying a Car
When it comes time to buy a car, you’re immediately jumping in the shark tank with regard to financing. You can often pay cash for super cheap cars, or basically junkers, but the bad credit part of your life will rear it’s ugly head if you need to get an auto loan in order to afford a slightly nicer car. Bad credit will tag you as a risk, and though you may eventually get your loan, the amount or the interest rate won’t necessarily be ideal. There are companies that will work with you to handle this, but ideally, you want great credit before try to buy a new vehicle.
Renting an Apartment
Another time bad credit can come back to haunt you is if you’re trying to find a nice apartment complex to live in. Again, even with proof of income, if you have black marks on your credit, that may be enough for apartment managers or owners to pass you by. Having a letter of recommendation from a previous apartment manager can help, but that still won’t discount the fact that you’ve had financial troubles in the past, and haven’t totally fixed them in terms of your record. Having bad credit can severely hamper your chances of getting traditional real estate loans as well, that is, lenders might not feel too comfortable giving their money to somebody who has had a history of bad financial management. However, in such cases, you can go for colorado hard money loans (or similar ones in your area) where lenders do not require good credit to give you a loan. Instead, you can list some of your belongings as collateral, such as an existing property or a car, and these assets can be acquired by the lender in case you fail to pay them back over time.
Getting a School Loan
There are some school loans that are relatively guaranteed, such as those that you can get through the government scholastic programs, but if you want to get a school loan outside of those federal channels, having bad credit is a great way to make sure that never happens. Again, it all comes down to risk factors – if banks or private individuals feel like you might not pay them back, you’re not going to get the money you ask for.
Starting a Business
And finally, if you’re planning a starting a business, one of the first things that you should do is make sure that your credit looks as clean as possible. Not only is that important for business loans, but if you’re looking for investors, or even clients, they’re going to want to make sure that you’re financially secure as a rule before working with you.