You have a credit card, an unpaid car, or a rent to pay and forget to do it or you don’t do it on time. You have unpayable debts and your money is committed and you have not yet received it. If this situation sounds familiar, you are probably experiencing the affected credit. Most banks consider credit affected when it drops from 540 score. However, there are economics study groups that view the most dramatic case with a score of 350.
But what happens when you have the affected credit? What consequences does this have? Here we explain:
Having a negative credit history can harm you for a long time if you don’t take quick action. Likewise, it will harm you in the approval of loans or purchases because banks or lenders will not trust your ability to pay.
Bad offers for finance or refinance
Just as the ability to receive loans is affected, the ability to receive financing or refinancing is affected. This means that, because you cannot make your payments, you assume negative consequences on buying or refinancing actions. Borrowing will be increasingly difficult or will have negative effects.
Have to pay more
By having the credit affected, the interests will not be favorable for your financial health.
You could receive high interest on loans and credit cards you request. If a credit card with this history is approved, the probability is that the interest rate will be high. Therefore, having a bad credit index can be a short and long term damage to projects that you plan or have on your list for the future.
Involve other people
When you receive high interest and the non-approval of personal loans or loans for the purchase of your home, you start looking for other alternatives. The option that many people use is the help of a family member or friend who, out of appreciation, becomes their co-debtor. This power carries the great responsibility of keeping your debts up to date so that your co-debtor’s credit is also impacted.
Emotional and mental impact
Hand in hand with bad times because of the few financial possibilities due to a mismatch in your credit is the emotional and mental impact that this situation can cause. Headaches, anxiety, depression and inability to develop solutions and despair can attack you daily. Your economic instability can destabilize your personal balance.
Having the affected credit is not the best alternative to live without worries and with good financial health. Planning and budgeting will help you know how much you can spend and from which account you can make upsets that will not affect you in the long run.
Don’t let emotions control your income. Think and act with financial wisdom.
Do you have the affected credit? It is time to do everything possible to have a good credit. Act today and avoid problems in your future financial decisions. Find here 5 ways to improve your credit in team.