American consumers have relied on credit for decades. Credit information is compiled in credit reports that can impact many situations. Credit report errors and identity theft along with missed payments, foreclosure, and bankruptcy can negatively impact your credit report. If you’ve ever wondered what can bad credit do to you, the answer is… probably more than you thought.
A 2021 report by The Ascent revealed the average American maintains more than $5,500 in credit card debt while Generation X consumers hold more than $7,200 on average. In 2019, the amount of US credit card debt reached an all-time high of $868 billion, which dropped to $787 billion in 2021. However, total US consumer debt continued to rise from $13.86 trillion to $14.96 trillion in the same time frame.
With so much credit in use and available, it’s important to understand how bad credit can affect you and when a credit report lawyer can help.
Whether your credit report contains errors, mixed accounts (when someone else’s information appears on your report), and unauthorized debts— or reflects financial predicaments such as late payments, bankruptcy, and foreclosure—bad credit can impact many aspects of your life.
The Fair Credit Reporting Act (FCRA) requires credit reporting agencies and the companies that supply credit information to provide accurate debt information in your credit report. If you find any errors or unauthorized accounts or debts, you should dispute them immediately.
Sometimes the credit agency or creditor won’t follow FCRA rules, they don’t perform a reasonable investigation, or they refuse to correct the error. If this happens, you may need to work with an experienced credit reporting lawyer to clear up your report.
Let’s review some credit scenarios to understand what bad credit can do to you and your ability to borrow money.
Mortgage lenders review credit reports before issuing a loan. Bad credit and a low credit score will reduce the amount of money you can borrow and increase your interest rate. The lender may also require mortgage insurance and a larger down payment.
Before a credit card company issues a new line of credit, or a lender gives a loan, it will review your credit history. Bad credit will reduce your overall credit limit and unpaid balances will incur higher interest rates.
Some employers request a job applicant’s credit report before extending an offer, especially if the employee will make financial decisions, handle money, or hold a security clearance. An applicant with a bad credit report may appear less trustworthy and unable to make good financial decisions. As a result, bad credit can cost you a job offer or promotion.
Landlords and rental agencies are allowed to pull potential renter’s credit reports to determine their creditworthiness. A renter with bad credit may need a higher security deposit, a co-signer on the lease, or they may be rejected outright.
Consumers with good credit will receive better coverage, pay lower premiums, and qualify for more coverage at a lower cost. Usually, people with a poor credit score end up paying double the premium amount compared to policyholders with good credit.
First, you should review your credit reports regularly. The three major credit reporting agencies offer a free annual report that you can request at this site. If you find errors and unauthorized accounts, unfamiliar debts, or unknown credit inquiries you should dispute them. If your dispute is rejected, an experienced credit report lawyer may be able to help.
If your credit information is correct but needs improvement, consider these tips to fix your credit over time:
If your credit report contains negative, but accurate information that is preventing you from receiving credit or decent credit terms, the information in this article should help you start on the road to recovery. However, if your credit is good, but your report contains negative, false information, we may be able to help.
The tenacious team of FCRA lawyers at the Financial Justice Initiative fights for consumers whose disputes have been rejected by credit reporting agencies and creditors that provide false information. If you need help dealing with creditors or reporting agencies, call (855) 929-1051 or complete this simple form to schedule a free case consultation today.