Effects of a bad credit rating

Why you should avoid bad credit ratings

Missing a payment here and there may not seem like such a big deal, but it could be a problem for you later on.

For example, if you’ve got a mobile phone contract and skipped a few bills when times got tough, for the next five to seven years, you may have trouble getting a loan for a car, or a house, or even a credit card.

It could even be something entirely not your fault. If you’ve ever trusted a flatmate, friend or relative to pay a bill in your name and they forgot, that too will affect your credit rating.

This is because all companies that provide you some form of goods, services or credit you regularly have to pay for, will record your missed payment on your credit file.

It is this credit file that shows your credit rating, and ultimately decides whether you’re a suitable candidate for any future credit applications you may need.

Here’s how a bad credit rating could affect you:

  • You’ll get a higher interest rate on credit cards, personal loans, car loans and other loans;
  • You may have credit and loan applications rejected;
  • You may have a hard time getting a lease on a rental property;
  • You may be hassled by debt collectors;
  • You may be rejected for a mobile phone contract;
  • You may need to pay upfront deposits for electricity and gas;
  • You may be rejected for a job;
  • Your insurance premiums could be higher.

Request your credit file for free from the Office of the Australian Information Commissioner. If you’re aware of your credit history, you’ll be better at being in control.

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