Most people think that bad credit only keeps you from getting a credit card or loan, but it much more further than that. Bad credit can end up leaving you homeless, carless, and jobless. With the New Year on the horizon, here are some reasons you should repair your debt problem and make it a part of your new year resolution.
1. Save money on interest
Low credit scores generally translate to higher interest rates, which in turn translates to higher finance charges on your credit card balances. If you repair your credit, then it would allow you to get a more competitive interest rate and will also cut back on the money you pay in interest.
2. Stop paying high security deposits
Utility service providers, along with phone companies are in the habit of checking your credit before allowing you to establish service. In order to ensure that the risk of default is minimal, those service providers charge you a deposit. If you make your payments on time then you will be allowed to have your deposit back. If you improve your credit score, then it keeps you from having to pay the deposit all together.
3. Get a lower insurance rate
It might not be a common knowledge, but your credit affects your insurance premiums. This will include auto, life, and home insurance. A bad credit will result in you paying more for insurance than you would if you had better credit.
4. Stop paying cash for everything.
If you are dealing with bad credit, you’ll have a hard time getting a credit card, which simply means that you’ll end up paying cash for everything. It might not seem like a nuisance until you need to do something like renting a car, where you have to pay an extra deposit if you don’t use a credit card.
5. Get a higher credit limit
Generally, if you can demonstrate that you can pay your bill on time, your creditors will increase your credit limit. But, before a credit card issuer will check your credit score before he increases your credit limit. A bad credit history might get your credit limit cut hurting your credit score even more by raising your credit utilization.
Getting out of your debt will allow you to have the freedom to do things you like and take risks. With debt out of your life, you will be free and less stressful. Make this your New Year’s resolution and never get trapped into the cycle again.