What Can Bad Credit Do to You and Can a Credit Report Lawyer Help?

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. 

What Can Bad Credit Do to You? 

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.  

What to Do If Your Report Has Errors 

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. 

If the Negative Credit Information is Accurate, How Can it Affect You? 

Let’s review some credit scenarios to understand what bad credit can do to you and your ability to borrow money. 

Buying a home 

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.  

Credit cards and loans 

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. 

Apartment Rental 

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.  

Insurance policies 

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. 

How to Fix What Bad Credit Can Do to You

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:  

  1. Always pay your debt on time, even if you only make the minimum payment allowed. Don’t miss payments and catch up on late payments as quickly as possible. This factor plays the largest role in your overall credit score.  
  2. Maintain a low credit utilization rate. To calculate your credit utilization rate, add up your credit balances and your credit limits. Divide your total balance owed by your total credit limit authorized and multiply by 100 to reach a percentage of credit utilization. A low utilization rate (usually 30% or less) will help you qualify for better credit terms.  
  3. Create a diverse mix of credit including installment loans (such as a car loan or mortgage), revolving credit (such as credit cards), and other debts that you can pay on time for a long time. Keep older credit cards active to establish a solid credit history. 
  4. Don’t apply for too much credit in a short time frame or it could look like you are in a desperate financial situation or that many companies have denied you credit.  

The Financial Justice Initiative Helps Consumers Protect Their Credit  

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.