Bad credit can affect more than just your ability to borrow money. It can also have an impact on the process of getting a job or renting an apartment. Here are some important points that you should know about it.

What is “bad credit” and how is it determined?
A person with bad credit is one who is known to have a low credit score.
So, what is a credit score?
In borrowing money, lenders will always check on your credit score to see if they want to lend you. It is a number which is used by the lenders to identify how risky you are as a borrower.
A credit score is most commonly determined through FICO – a standard formula developed by Fair Isaacs Corporation. 750 and above will be marked a good credit score while 550 and below will be marked bad.
Meanwhile, credit score consists of five factors to determine your qualification as a borrower and how likely are to pay your debt.
Payment history (35%) – Lenders will definitely check whether you’ve paid back your debt/s in full and on time.
Amounts owed (30%)  – A common principle for lenders is: If you carry a lot of debt, you are less likely to pay back what you’ve borrowed. 
Length of credit history (15%)  – Lenders definitely want to see a lot of experience in managing your debt, they like to see you practice responsible borrowing.
Types of credits in use (10%)  – Lenders are also interested in the type of credit you have
– credit cards, installments, mortgages etc.
New credit (10%)  – They are on the lookout if you applied in a lot of loan application in just a short period of time; this would affect you negatively.
Negative effects of bad credit.
Surely, bad credit can make it harder for you to get a loan, but it affects other things too; those you think are just simple ones…
Mortgage  It may be harder to qualify for a mortgage if you have bad credit. If you do, there’s a high chance for you to get charged for a higher interest rate and number of years you’ll have to pay back.
Renting Some landlords may actually pull your credit report and see if you have full ability to pay your rent.
Getting a job  While they’re not supposed to deny a job because of bad credit, a survey says that 47% of employers check credit score of new job applicants.
Car Insurance  Car insurance companies use their own data to determine who’s most likely to ding his car and believe that there’s a connection between low credit scores and accidents.
Home Insurance – Almost the same with car insurance companies, home insurers also believe that there’s a connection between a low credit score and a false claim on a house or an apartment.
Water, electricity and gas  Regularly check credit scores on customers. Bad credit may require you to put up a larger deposit.
Just because you have a bad credit at the moment, doesn’t mean that you’ll have it forever! You definitely have the power in your hands to change it and start putting your credit standing in the right order again.
Fix your bad credit and improve your credit score.
Start today!
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