Anyone who has had bad credit knows that it can be a huge pain in the butt.
Oh sure, it doesnt seem to affect your day-to-day too much.
Here are a few disadvantages of having poor credit, and what you might do about it.
Weve told you before: service providers areallowed to charge you more for having poor credit.
Its called risk-based pricing, and according to the FTC, its totally legal.
Thats called risk-based pricing.
By law, the company has to send you a Risk-Based Pricing Notice.
If there are any errors, write thecredit bureau a letter disputing them.
Because your credit isnt stellar, these companies chalk you up as a risk.
Theyre afraid you wont pay up, so they hedge their bets by charging you more.
The NAIC says its actually your credit based insurance score that these companies check.
It also compares total interest paid over the life of the mortgage.
Youll Have Higher Interest on Other Loans
High interest rates arent just limited to your mortgage.
Bankrate suggeststrying to get a loan with a localcredit union, which might be a little more lenient.
They add that even your employer or insurance carrier might offer auto financing.
They also suggest shopping loan terms, not just monthly payment.
Its worth noting that you should avoid dealership financing if at all possible, because rates are usually higher.
Of course,cosigning is also an option, but not one that should be taken lightly.
If so, check that youre clear on what happens to this money when you move.
Your credit score and your credit report are different.
To protect yourself, check your credit report for any errors or negative items.
While there are some workarounds to each of these hassles, fixing your score is the best long-term solution.
Image by Tina Mailhot-Roberge.
