How a Bad Credit Score Can Ruin Your Life

Everyone knows that a bad credit score is a bad thing. Duh. But not everyone knows why. But I believe that if you see the reason for something, you’ll be more likely to behave. For instance, if someone tells you not to eat Doritos, you’ll still eat them because they’re tasty. But if someone tells you not to eat Doritos because they will make you gain weight, now you have a reason to put down the chips.


Everyone I talk with know they should have a high credit score. But few really understand or appreciate why. This post will clarify. This post will explain many of the negative outcomes that can occur as a result of a poor score.

Higher Monthly Bills

Yes, your phone, internet and television bills can be higher – or any other bills for that matter. Many of these companies charge using risk-based pricing. This is perfectly legal. Basically, if they think you may become a liability, they charge you more. What can happen is that the company you use can flat-out send you a risk-based pricing notice with a bill for an extra, say, $10 per month. Talk about an obvious reason to boost your credit score. You can see exactly how much a poor score is costing you.

Mortgage Time

The purchase of a home will probably be the largest purchase of your life. With that said, you want the best deal possible. But with a low credit score, that will not happen if you get a mortgage. While you can get an FHA loan with a score as low as 580 (or possibly even lower based on an individual assessment) – it won’t come cheap. A lower credit score will cost your tens of thousands of dollars over the length of the loan. Tens of thousands.


Your insurance may also be higher if you have a poor credit score. Insurance is really just like any other bill. If the company thinks you may flake out on them, they will charge you more. This applies to all sorts of insurance categories: home, auto, life…

Job Opportunities

Probably every large employer runs a credit check. I know when I worked for a Fortune 500 company, they ran my credit. Think about it like this. A credit score is the closest thing we have to a financial report card. Employers want to know how well your finances are doing. If they are poor, that stress will no doubt find its way into the workplace. You could constantly be getting calls from creditors throughout the day, you may be tempted to steal money from work, you could be too stressed from your personal money problems to be productive at work…

All of This Compounds

Those with a low credit score go through life paying more than everyone else. It sounds unfair but that’s just how it works. Those who can barely afford something are often those that will pay the most. It’s kind of like how it often takes money to make money.

This is why I watch my credit score closely. I don’t want to overpay for anything. I want to spend as little as possible on things – especially with things such as fixed costs like a mortgage payment, cell phone bill, car insurance, etc. I believe that getting your monthly bills as low as possible is a large majority of what needs to be done in order to become rich. Saving a buck or two here and there is nice – but getting your monthly bills down… that’s a gift that keeps on giving month after month.

What’s your credit score? A good rule of thumb is to make sure it’s at least 740. A 740 credit score is the credit score needed to buy a house at the lowest price.