How does a bad credit rating affect you
Is your credit score really that important when you're struggling financially?
"But how will this affect my Credit Rating if I default?" This is a typical question asked by many people who have reached the point where they must address their debt situation. You have to ask yourself, "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 struggling to manage their debts primary 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".
Taking action to deal with debt doesn’t always come without its downside; however, it is a very small price to pay 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 more significant 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 some 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. It's an opportunity to learn from past mistakes, understand the risks of borrowing or using credit facilities, and master managing your financial life without leaning on credit as a crutch. Once you've achieved this, you can focus on building your credit score and using credit to make money, such as a mortgage to purchase a property. This process of learning and growth puts you in control of your financial future.
It would be best to educate yourself more about debt and borrowing. We have a few articles at the bottom of the page that will help you. You can also visit our Financial Education section to expand your knowledge.
Is your credit score really that important?
If you are struggling financially to the extent that the situation is consuming your life, the last thing on your mind should be to hold on to the ability to make your situation worse (the ability to borrow more).
In short, your credit rating is unimportant when your mental well-being is affected. Your goal should be to find a way out of your situation with the most negligible negative impact on your life. You can visit our I need help with debt section, where we detail your options with the pros and cons. TRDG’s got you covered.
Remember to read The Real Debt Guy's final thoughts below!
The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.
