4 Consequences Of Bad Credit

4 consequences of bad credit
Fiona Staff3/16/2020

When it comes to obtaining the bare necessities, a person’s credit history can impact a number of important factors. For people with bad credit in particular, the negative consequences can cause several disadvantages to one’s quality of life. 

Bad credit can result from several different causes. Typically, being delinquent or in default on credit accounts, whether it’s a credit card or loan, will reflect very poorly on your credit history and score. In addition, simply spending too much on a credit account, which results in a high credit utilization ratio, can negatively impact your credit. Bad credit can also be caused by an excessive number of applications for different financial products, as it results in multiple (link: /learn/about-loans/understanding-the-benefits-of-a-soft-credit-pull text: hard inquiries) on your credit report. In a worst case scenario, filing for bankruptcy can stay on your credit report for (link: nerdwallet.com/blog/finance/credit-score/how-long-bankruptcy-stays-on-credit-report/ text: seven to 10 years). 

It can be difficult to repair the damage caused by having bad credit. Applying for new credit can become a challenge, and the same goes for other applications where your financial stability is put into question. Below are four examples of how bad credit impacts a consumer.


For prospective homeowners, bad credit can make it difficult to obtain a mortgage or a preferred interest rate. For those still renting, bad credit could lead to rejected applications. Poor credit can also make it more complicated to turn on utilities, as companies may require deposits for electricity, gas, or hot water, if a consumer has a history of non-payments or defaulting on past debts.  


In some states, companies may request credit checks for prospective job applicants (only with provided consent from the applicant), particularly if those positions have financial or managerial responsibilities. Hiring committees may view bad credit history as an indication of someone who’d be irresponsible handling or managing company funds (e.g., overspending on a project budget). As a result, bad credit could be the difference in not getting offered a job you want.  


Poor credit can also lead to increased insurance costs. Auto insurance companies are likely to charge higher premiums to those with poor credit, based on a correlation between bad credit history and filing auto insurance claims. It’s also possible that companies providing renters or homeowners insurance will run credit checks that may result in customers paying higher rates due to their history. 

Loans & Credit Card Access

Lastly, having bad credit can make it hard to get approved for financial products like credit cards and loans. The lower a credit score, the tougher it will be for a consumer to get a credit card featuring: a low interest rate, a high spending limit, and access to rewards programs. For those looking to rebuild their poor credit, however, secured credit cards can be a great resource. Secured cards typically require a cash deposit in lieu of a credit check, which means bad credit won’t get in the way of an application. The deposit, which can vary, becomes the credit line on the account. 

Secured cards are a great way to build credit back up through responsible use and timely payments. Fiona can match consumers with secured cards that require no credit check. GET MATCHED

In addition, while personal loans are harder to obtain with bad credit, there are options available for consumers with poor credit scores. 

Bottom Line

Bad credit can cause a lot of financial baggage. A poor credit history can jeopardize a consumer’s ability to obtain a home or find job opportunities in certain states, while also increasing insurance rates and limiting loan and credit card access. Secured cards can help those with bad credit obtain new credit and start rebuilding their credit score. Fiona matches you with secured credit card offers that fit your needs.

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