The Many Negatives of a Bad Credit Score

credit scoreI must admit that I am a faithful follower of Dave Ramsey and fully believe in his teachings of not being in debt.  My husband and I have lived all of our married life this way.  We purchased our home foreclosed and with a loan from a family member, which we paid back with interest.  We have never financed a vehicle and have never purchased a new vehicle.  We are just people who choose to pay in cash and we don’t buy stuff that we can’t pay for outright.

As Dave Ramsey teaches, our credit score is a big fat zero.  Yes, I said 0, as in non-existent.  This has never bothered us because we don’t borrow money but recently we have had several instances in which our non-existent credit score has negatively affected our lives.

foreclosure

For starters, we now have a daughter that is 19 and as any parent would like to do, we would like to help her in her next stage of life.  She is currently renting a basement apartment and paying 400 per month.  With all of the foreclosures in the housing market, hubby and I decided that we could help her by buying a low cost foreclosure and allowing her to pay us back.  We felt that we could allow her to pay us a lower amount and help her get a better start in life.  She is working full time while going to college and is a very responsible young lady.  Anyway, we spent some time looking at HUD foreclosures on the HUD website here and found several places that we felt would work.  We assumed that we could borrow money against our home and have no problem.  WRONG!  When we called the realtor we were told that they wouldn’t even talk to us without being able to pull our credit history.  And or course, we don’t have one so she basically laughed at us.  Her answer was to go get a credit card to build our credit score so that we could build our score.

I also recently went to add insurance on a newly purchased used truck and found out that our insurance company now uses credit scores to determine insurance rates.  Guess what?  Ours went up because or our low score.

So I decided to do some research and found out that there are many negative impacts from a low credit score.  Many of which I did not know.  Did you?

  • Prospective employers can access your credit history to determine whether or not to offer you a job
  • Landlords can use your credit score to determine whether or not to rent to you or to determine how much of a deposit you must pay
  • Auto insurance rates may be higher
  • Home insurance rates may be higher
  • Deposits for utilities may be higher
  • It may be impossible for you to get a mortgage
  • It may be impossible for you to start a small business

credit card

With all of this taken into consideration, my husband and I have had a conversation I never expected to have.  We are considering getting a credit card!  GASP!  I know but we have to start somewhere so if you have other ideas, please help me out.  List them in the comments.  We are open to advice.

7 thoughts on “The Many Negatives of a Bad Credit Score

  1. If you need to build credit owning a credit card is a great way to do that provided you pay it in full every month. The moment you make an excuse you are doomed. When I moved to Canada I had zero credit score or credit history and that is what I had to do. Now almost 6 years later my credit score is excellent.

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    1. Thanks for the advice. I realize that a credit card that is fully paid off each month is a way to raise our credit score. I am just having trouble taking the idea of a credit card out of the category in my head if evil.

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  2. I am sorry to hear you are in this situation. My husband and I are debt free including the house, buy cars with cash, but we do have credit cards set to pay in full each month. In this area we do deviate from Dave’s teachings. We have been free of credit card debt for probably 15 years and have no temptation whatsoever to pay interest to anyone ever again! I will be interested to see what others have to say.

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  3. Hello….I had to build credit when I purchased my home. I bought a Secured Credit Card from Citicard. Basically you have to put 100.00-300.00 down on they card, they send it to you and you use it just as you would a creditcard. It helped me to bring up my score. Email me at lakmoch@yahoo.com and I can send you more info.

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  4. Hi there! I know this is kinda off topic but I was wondering if you knew
    where I could locate a captcha plugin for my comment
    form? I’m using the same blog platform as yours and I’m having trouble finding one?
    Thanks a lot!

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