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Credit Repair Education

1 - Introduction to Credit2 - Repairing Your Credit3 - Protecting Your Credit4 - Consumer Credit Laws5 - Resources




Consequences of Bad Credit

Those who have credit often have to pay more for things that their “good credit” counterparts do not.  These increased costs come in the form of fees (on credit cards and secured loans) and increased interest rates.  Those with poor credit can expect higher interest rates when purchasing a car or a home.  These consequences can haunt those who have made financial mistakes years earlier.  As if that isn’t bad enough, the “universal default” policy allows creditor A to raise their rates if you have problems with a different lender, or if your credit score goes down.  Unfortunately, they can do this even if you are paying creditor A on time.
Underestimating Bad Credit
Many people underestimate the power of bad credit.  It’s easy to dismiss it as being no big deal if they feel they can handle the increased fees.  But bad credit can be worse than simply paying increased fees and interest.  More and more employers are doing credit checks before hiring.  Whether or not it’s accurate, they link those with poor credit with lower production, and they usually opt for someone with better credit.  

Another growing trend is insurance companies using credit scores to help determine rates.  Although this is still being examined to determine how ethical it is, this just goes to show once again that one is better off with good credit.
Recognizing Impending Credit Problems

If you’re wondering if your credit could be in trouble, look out for these signs:
  • 1. Your FICO score is low.
  • 2. You have fees on your credit card statement.
  • 3. Your credit card is declined when you attempt to make a purchase.
  • 4. You experience a jump in your insurance premium.
  • 5. You receive higher financing rates due to your credit score.
  • 6. You use credit cards to pay for living expenses.
  • 7. You recently got married and your spouse has a lot of debt.
  • 8. You exceed your credit limits.
  • 9. You don’t have any savings specifically for emergencies.
  • 10. You are contacted by collection agencies.
Bad Credit has Longevity
On main advantage to having bad credit is the longevity of it.   Most negative information on your credit report will stay on it for 7.5 years unless you resolve it.  Tax liens will stay on your credit report permanently until you pay it and bankruptcy (Chapter 7 Liquidation and Chapter 13 Reorganization) stays on your credit report for 10 years.  As a result, this will cost you years of problems and makes it harder to improve your credit.
The Psychological Effect

Most people with bad credit have messy finances.  They maybe behind in payments, have missed payments or have stopped paying their lenders.  As a result, they are getting threatening letters and phone calls from bill collectors.  
Additionally, couples who find themselves in this situation may start to argue frequently, point fingers at each other or divorce.  One of the main reasons for  the high divorce  rate in the United States is  because of money.  Couples find themselves in debt which leads to a host of other problems.  Being in serious debt can cause people to not sleep well at night, may lead to depressions, poor performance on the job, divorce, stress, etc.
Some people find themselves with bad credit because they have underlying reasons.  They run up their credit card because they are impulse buyers, buy when you are depressed or lonely, buy alcohol or drugs because you are addicted, gamble because they are addicted, they want to impress their family / friends / neighbors, or they are very materialistic.  They end up placing themselves in so much debt that they can’t pay back.
If you are addicted to spending you can get help at Debtors Anonymous.  Debtors Anonymous uses the same proven techniques as Alcoholics Anonymous.  You can locate the nearest DA chapter to you by visiting or call 781-453-2743 or 800-421-2383 . 


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