How does a bad credit rating affect you
How important is your Credit Rating when struggling financially.
"But how will this affect my Credit Rating if I default?" This is a normal question asked by many people who have reached the point where they now need to address their debt situation. You have to ask yourself the following question " if I'm worried about my credit rating or credit score, am I really struggling with my debt?".
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I want more debt
Let's take a step back for a moment. When a person who is struggling to manage their debts’ main focus is to preserve a high credit score. What they are technically saying is..
"I’m struggling with my current debts, but I still want the ability to get into more debt".
The truth is, taking action to deal with your debt doesn’t always come without its downside; however, it is a very small price to pay in order to take back control of your life. A life that may be spiralling out of control. The emotional and mental stress of debt has a far greater impact on a person than having to rebuild a credit score.
A lesson learned
When you have a default or any other negative mark registered on your credit file, it will affect your ability to obtain credit for a period of time. That doesn’t mean you cannot borrow; it means that your options will be limited and the cost of borrowing may be higher.
What you should take from this situation is a lesson. You should learn the risks of borrowing or using credit facilities. You should also learn how to manage your financial life without having to lean on credit as a crutch. Once you have mastered this, you can then focus on building your credit score and use credit to make you money i.e., a mortgage to purchase a property.
You should also educate yourself more about debt and borrowing. We have some articles at the bottom of the page that will help you. Also visit our Financial Education section to build your knowledge up further.
You should learn the risks of borrowing or using credit facilities. You should also learn how to manage your financial life without having to lean on credit as a crutch.
The Real Debt Guy
How important is your credit rating?
If you are struggling financially to the extent that the situation is consuming your life, the last thing in your mind should be to hold on to the ability to make your situation worse (with more borrowing).
In short, your credit rating is of little importance when your mental wellbeing is being affected. Your goal should be to find a way out of your situation with the least negative impact on your life. Visit our I need help with debt section where we go through your options in detail with the pros and cons. TRDG’s got you covered.
Don't forget to read The Real Debt Guy's final thoughts below!
The information in this article is considered to be true and correct at the date of publication.