About Bad Credit

The United States is a country built on credit. Throughout the world, the American economy stands as a symbol of capitalism, and synonymous with it are loans and credit. In no other country will you find credit card offers left and right, financing opportunities for everything from TVs to furniture. It is for these reasons that the United States is so powerful and well off, and also why its citizens hold such extraordinary amounts of debt.

Americans are born and raised with the belief that everything can be bought on credit or put on layaway. If you see a pair of shoes you would love to buy but don't have the cash, you finance them. If you run across a gift for your significant other and don't have the money, you put in on your credit card. Little by little, payments accumulate and soon you are left with a huge amount of debt and little money for anything else other than payments. When a situation like this arises and loan payments are missed, people often get stuck with bad credit.

Bad credit can come at a person extremely fast. With the way the American economy is structured, one has to exercise a great amount of willpower in order not to succumb to the temptations of buying luxuries with the money they don't have. If not, it is easy to get overwhelmed with the required payments and fail to pay them all on time.

The result? - A bad credit rating.

What are the consequences of having bad credit?

To put it into not-so-many words, they're not good. When you are marked as having bad credit, lenders will be a lot more reluctant to extend those financing opportunities and credit cards to you. When they do, your interest rate will be higher than if you had good credit. Essentially, those missed payments on your credit card will cost you dearly down the road. When you miss a payment, you are not merely stuck with paying a late payment fee. You are also faced with the potential of paying higher payments for years to come.

So next time you are faced with a credit decision, thoroughly think it through. Can you afford this? Will you be able to make the payments on time? Be honest with yourself, because if you are not it may cost you a lot more than you bargained for.

Go back to Credit Reports