The Unexpected Costs of Bad Credit

May 15, 2015 | by Katie Claflin

Categories: Housing Counseling

Your credit score can affect a lot more than just your ability to qualify for a loan. Even if you’re not in the market for a home, a new car or a credit card, if you have bad credit, you could see some unexpected consequences impacting other aspects of your life.

• Your Employment.  With your permission, it is legal for a potential employer to review your credit report before they hire you. Even if you already have a job, your current employer may be able to review your credit report under some circumstances.
   
• Your Utility Bills. Utility companies may pull your credit report to determine your utility rates and whether you will be required to put down a deposit or add a co-signer to your account.  This applies not only to gas and electric companies, but also cable, telephone and internet providers.
   
• Your Cell Phone.  Cell phone companies often require customers with low credit scores to pay a higher deposit or they may restrict the number of phone lines on the account.  While pre-paid phone plans can be a good alternative for customers with lower credit scores, the monthly rates for these plans are often more expensive.
   
• Your Insurance Rates.  More than 90% of insurance companies now use credit data when determining your policy rates.  Customers with lower scores may be subject to higher monthly premiums, regardless of the number of claims on their record.
   
• Your Apartment. And finally, it is common for landlords to pull your credit before approving your rental application.  Missed payments could signify that you are less likely to pay your rent on time, so landlords may require you to pay a higher security deposit or reject your application altogether.

If you’re struggling with bad credit, you’re not alone.  Millions of other Texans are facing similar challenges. In fact, a 2014 annual credit study conducted by Experian found that two Texas cities (Harlingen and Laredo) are ranked among the 10 U.S. cities with the lowest credit scores. 

But there’s good news in that it’s never too late to begin repairing your credit.  Click here to read Experian's recommendations on how to improve your credit score. TSAHC highly recommends that anyone concerned about their credit score also contact a nonprofit housing or financial counselor.  These qualified professionals can help you understand your credit report and begin taking steps to repair it. 

And as of April 2015, a nonprofit counselor can also provide you with a free copy of your FICO score.  To find a nonprofit counselor in your area, visit the Texas Financial Toolbox www.texasfinancialtoolbox.com.

There’s no quick fix to repair your credit, but don’t get discouraged.  With the right steps in place, over time you should begin to see your credit score improve, saving you a lot of money and stress in the long run.

On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.