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Bad Credit - Help! I Just Found Out I Have Bad Credit

A young man recently came into my office. He was out of money, lost his job, and failed to pay his credit card bills for a few months. Credit card companies were badgering him night and day. He tried to go to a bank to get a loan in which to pay off all of his unsecured debt, but he was denied a loan based on his credit history. He had bad credit and needed advice. 
I told him that bad credit is a very serious problem. Even as a young person, he was able to see how bad credit was limiting his freedom and preventing him from participating in many things. Solid financial planning and a commitment to repay his loans, I told him, would ensure the financial independence he needs to achieve his lifelong dreams.

Good versus bad

If you are applying for a home loan, personal loan, debt reconsolidation loan; whether secured or unsecured, you'll quickly hear the terms "good" and "bad" credit. You'll be waiting for the results from your credit report and praying that you score "above average" on the report and don't end up like the young man who came to see me who had waited too late to easily repair the damage.

Why? What is the big deal? 

It is a big deal to be pegged as a poor credit risk. Bad credit means poor credit—and it also means high risk to lending institutions who will mitigate that risk by charging you higher interest rates. Common practices that damage a credit rating include making late payments, skipping payments, exceeding card limits, and being generally lackadaisical about your bills. Two words that follow "bad credit" are often "credit denied."
But don't despair if you have bad credit. There are personal loans available that can help you improve your credit rating. If your bad credit rating comes as a surprise to you, you should request a copy of it and go over the information with a credit counselor. It could be a mistake on the credit bureau's part. It could also be a case of mistaken identity. Or worse, it could be a case of identity theft. 
One thing a person can do to prevent unfortunate circumstances from turning their good credit bad is investing in loan protection. People should make regular, periodic reviews of their credit history to protect them from misinformation.

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