The improper use of credit involves many decisions, choices, and situations, including purchasing goods and services you cannot afford, missing payments, maxing out credit and store cards, applying for too many accounts, and having accounts go to collections or be charged off by the creditor. Filing for bankruptcy, trying to settle your debts for less than what you owe, and doing anything other than paying according to your agreement with the creditor will lead to a poor credit history.
So, how might poor credit negatively affect your life? Obviously, failing to qualify for a home loan or a start up business loan could be devastating both financially and emotionally. What’s more, poor credit can mean you do not get the job you wanted in law enforcement, government, finance or other industries that use credit in their hiring processes. Poor credit can mean you pay much higher premiums on your vehicle, life, and homeowners insurance.
Fortunately, poor credit is not forever. There are many ways to build and rebuild your credit, which we will share in lesson #9 of the Credit Score module. For now, let’s make sure to differentiate between your credit report and your credit score.
