How Having Poor Credit Can Cost You

It has been a long time since I have been out of college, but to my knowledge I don’t remember there being any sort of personal finance class, or if there was, I definitely wasn’t paying attention, and I should have.  Little did I know that your credit report will affect you the rest of your life, so in order to minimize wasting money on interest payments, having less than perfect credit will cost you in the long run.

Mortgage Interest Rates Spike

You spent years of saving for a down payment and closing costs to purchase your first home but when it comes to loan approval, you could see a huge monthly payment spike if you have poor credit, which takes you out of the best interest rates on the market.  Since you are talking about a loan in the hundreds of thousands, every percent increase to the monthly payment could cost you thousands of dollars per year, just going to interest, not even towards principal.  Think of how much more house you could buy, or the money you could save, even.

Could Come Between You and Your Significant Other

Everyone has their secrets and skeletons in the closet, but when it comes to having a relationship that gets serious and into marriage, where you begin to share your life, and assets with this person, the liabilities come along with it as well.  If you spring a surprise student loan or credit card debt into the relationship it could cause tension within the relationship, as the first priority is to get rid of debt, so the other may need to chip in, in order to free this burden.  It may be a difficult conversation to have, but you should be open and honest about everything in your life; finances included.

Miss Out on Rewards Dollars

I have become obsessed with credit card rewards of late after receiving a check back from Costco Citi card for about six hundred dollars, so I now make sure I use this credit card for every purchase.  It does mean a little more discipline when it comes to spending as it can be hard to be on a budget when usually a virtually unlimited credit line, so be sure that you are still spending in reason and you can pay off the full statement balance by the time it is due, otherwise having any balance carry over to the next month will cost you interest, which by some cards can be upwards of 16% APR.

Could Cost You a Job

As strange as it sounds thinking about employers taking a look at your credit, but if you think about it, they want a well-rounded person, so if you have had financial problems and have been irresponsible to lenders, then it could be likely that you bring that into the workplace as well, so companies do make sure they do their due diligence when it comes to hiring potential new employees, so all the more reason to reach for the credit ceiling.

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