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Blog Jul 26, 2012

My Credit Sucks: Living with Bad Credit


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Banks and utility companies often hear consumers say, “My credit sucks.” Those who want to fix bad credit often do not understand how their credit became damaged in the first place, and they also are not aware of the repercussions of having less-than-perfect credit. In this, the first in a series of blogs on the topic, Payless Power explains how to fix bad credit, how to live while you are repairing your credit, and what effect bad credit has on your life.

Damaging Credit

Many people who claim, “My credit sucks” actually may not be as bad off as they think. They have missed payments on credit cards or been behind with a car payment in the past, and assume that their credit has been irreparably damaged. However, the way lenders view credit has changed somewhat in recent years. It is true that missed and late payments damage your credit score, which is what lenders use to determine your risk for lending; however, lenders now realize that there are different levels of bad credit, and are making decisions based on the various levels rather than with a “one-size-fits-all” view of those who say “my credit sucks.”

Living without Credit

Even those who say, “My credit sucks,” should not completely stop using credit. In order to build credit, you must use credit, which may sound counterproductive. The way that you demonstrate responsibility is by borrowing money and repaying it on time. This demonstrates to lenders that, even though you may have had problems in the past, you have learned from your mistakes and are now responsible enough to pay bills on time consistently.

Repercussions of Bad Credit

If you can truly say with certainty that “my credit sucks,” it is important to understand the repercussions of not repairing your credit. People with truly bad credit pay much higher rates on mortgages and auto loans. If they are offered credit cards, the rates are astronomical, making it even more difficult to make the minimum payments, even if the balances are low. In addition to credit offers, consumers with bad credit could be denied apartment rentals, or be required to pay significantly high deposits to utility companies. Car and homeowner insurance premiums are also based on credit ratings, and those with bad credit often pay higher premiums.

There are steps that you can take to begin repairing bad credit if you are one who says, “My credit sucks.” One way to help you repair your credit is by choosing cheap prepaid electricity with Payless Power. For more information, call 866-963-9353 or visit us online.

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