Bad Credit Can Hurt -- Can Tell You How and Where

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Considering the idea of buying a new home this spring? Your first step should be to check your credit. Making sure your credit report and score are in the best shape they can be prior to home or mortgage shopping. Learn more about how bad credit can affect your financial future.

Most people know their credit card number better than they know their own credit score. The irony is a credit score affects your creditworthiness and what most people don't know is that a bad credit score can affect one's financial future for many years to come.

A credit score is the three-digit number lenders look at when deciding how responsibly you will handle debt. The score will fall between a range of 300 - 850, with the national average around 675. A high score indicates a history of handling debt well, making payments on time and not overextending oneself. A lower score suggests you had difficulties doing these things in the past, and therefore, lenders consider you a greater risk. Some of the areas where bad credit might affect you include:

Credit cards

An excellent credit score often earns you a major credit card with a rate of less than 10 percent. A poor credit score, though, may stick you with a rate twice as high.


Prospective employers, usually with written consent, are allowed to investigate your credit report to help decide whether or not to hire you. Employers often see your credit score as an indication of how reliable and trustworthy you are.


Insurance companies in many states use credit scores to determine your homeowner and auto premiums. Insurers believe that people with low credit scores are statistically more likely to make claims.


If you have a credit score of 720 and above (considered excellent), you will likely be able to receive a lender's best rate on a mortgage or home equity loan. One step lower and you may pay up to half a percentage more than someone in that top score category. Lower than that and you could end up paying as much as 2 percent more than borrowers with excellent credit. If your score is below 620 you're considered "sub-prime," which places you in the "less-than-perfect credit" category that lenders are reluctant to finance.

While you can't fix bad credit overnight, you can gradually improve your score by changing your borrowing habits. Get educated on your credit score, and begin doing what you can to ensure your financial future by fixing any issues that might affect that very valuable three-digit number.

About GetSmart®

GetSmart is a leading financial services marketplace that offers borrowers access to a range of home loan products from a network of more than 250 lenders. Consumers who visit the site at fill out a short and simple form to be matched with up to five lenders.

GetSmart is owned and operated by LendingTree, LLC, which is part of IAC Financial Services and Real Estate, an operating company of IAC (NASDAQ: IACI), which also owns or operates LendingTree Loans sm, LendingTree Settlement Services, LLC, RealEstate.comsm, Domania®, and iNest Realty, Inc.


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