What
Bad Credit Means to You
Introduction
Your credit rating affects many areas of
your life. While good credit can help ensure that you get
that loan, receive a good interest rate, are approved for
insurance, or are hired for a particular job, a bad credit
score can wipe out all those advantages for you. A bad score
can follow you around for some time, seven to ten years if
you’ve had a bankruptcy.
A Bad Credit Score and Lender Risk
To understand how lenders, insurers, credit
card companies, and employers think of bad credit, all you
have to do is think of “risk.” These companies
will have enough data and statistics to know that a person
with bad credit means a high risk.
The lender knows that people with bad credit
have a higher delinquency rate than people with good credit.
In fact, 87% of those with credit rates between 300 and 499
will have delinquencies. They may only make up 1% of the population,
but that means out of every 100 people who fall into that
category, 87 of them will be delinquent—if you were
a lender, would you want to loan money to them?
A Bad Credit Score and Seeking Employment
Pretend for a moment that you are en employer
and are choosing between someone with bad credit—who
could be irresponsible or need money to pay off huge debt—and
someone with good credit. If you are hiring for a position
where goods can be stolen, who would you choose? If you are
interviewing people for a security position? How about if
you are looking for a manager for a department, someone you
can hand a lot of responsibility to? It would be difficult
to choose the applicant with a poor credit history unless
it was caused by a crisis she over which she had no control. |