How Bad Credit Affects You

There are very few in things in life that can be more damaging than a poor credit score. It will affect you in ways you might not even realize, on top of possibly costing you hundreds of dollars extra a month. It all adds up to paying untold thousands of dollars, all of which can be avoided by re-establishing and repairing your credit. Here are some of the common ways bad credit can negatively affect you:

• Credit Cards: If you have bad credit, you’ll stand almost no chance in getting approved for prime credit cards that offer good rates, no yearly fees, and large credit lines. Instead, bad credit leaves you stuck with some of the “sub-prime” cards. These offer very little to you compared to prime cards. Many will require a yearly or monthly fee just for having them and rarely offer any of the cash back or incentive bonuses of prime credit cards. The worst part about these cards – most of them do not even report your positive credit activity to the credit bureaus, meaning they won’t help you in improving your credit score.
• Auto Loans/Financing: While there may be some car dealerships that offer auto loans to people with bad credit, the loans carry a much higher interest rate to accommodate for the risk they take in offering them. The interest rate on such a loan could be as much as 10% higher than that of someone who has good credit. Depending on the car’s payment, this could easily add up to a $100 dollars a month and almost certainly end up costing you several thousand dollars more over the years.
• Mortgages: If you thought an auto loan costing you several thousand dollars more was bad, just think about the amount of extra money paid in interest for a home mortgage. Bad credit will increase the interest rate on a home anywhere from 2% to 6%, which can be dramatic when seen over time. The monthly payment on the house will undoubtedly go up several hundred dollars and, depending on how long it takes to pay off the home, the added interest could add up to over $100,000 over a couple decades.

How to Improve Credit

If you’re attempting to re-establish your credit through a credit repair service, like Pyramid Credit Repair, there are some steps you can take to speed up the process and help improve your credit score. Bad credit can really affect you, and it can take as long as two years to fully repair your credit score and even longer if you’ve declared bankruptcy. Of course we’ll re-establish your credit as quickly as possible, but by following some of these tips you could have your credit repaired even faster:

• Pay all of your bills in a timely fashion. You’ll want to make as large a payment as possible on your debt, but your much better off paying the minimum payments if that’s all you can make on time.
• Open a checking account with a low minimum balance. Keeping your balance above the minimum and not bouncing any checks will show you’re capable of managing your money.
• Be vigilant about your credit score. Order a copy of your credit history and check for any mistakes or discrepancies.
• After paying off all of your balances, try eliminating all but two or three of your credit cards. You can use these in the case of an emergency and creditors will see you’re trying to be more cautious with your spending. Try to keep open the cards with the lowest interest rates or the cards you have had the longest and consistently made payments on. Eliminating old accounts may shrink your credit history, leaving only your recent negative history.
• Try avoiding any new lines of credit for a while as attempting to open new credit cards can negatively impact your credit score.
• If you haven’t already declared bankruptcy, do whatever you can to avoid it. Bankruptcy has an extremely negative affect on your score and can leave a long lasting mark.