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How Bad Credit Can Hurt in an Emergency

29 May 2013 3 Comments

People often don’t realize the effect that their bad credit issues has until they are in dire need of money, and don’t have access to it because they maxed out their credit cards and/or ignored their bills. When you are faced with a financial emergency it can be almost impossible to obtain credit if you find yourself in debt and have a bad credit history. Besides that, having bad credit can make life in general very difficult, from getting a job to finding a place to live. If an emergency pops up and you don’t have the money to foot the bill, you may want to turn to a loan to cover the expenses, however if your credit history is subpar you may find it hard to acquire the money you need through a loan. Credit applications will also often be denied, as credit card companies will not trust that you will make your payments and believe that your bad credit makes you a risk. Here are four situations that can be hard to deal with financially when you have bad credit.

 

Medical Emergencies 

If you fall and break your arm or your child runs an extremely high fever, chances are you will have to visit the emergency room. Unfortunately these trips can be very expensive, especially if you don’t have adequate insurance. In addition you may need medication or therapy, which will just add to your growing medical bill. If you or a family member is injured or becomes sick, and you have bad credit it can be very difficult to find a way to cover the costs if you don’t have enough money saved up.

 

Car Repairs

 If you or a family member is in a car accident, or your car simply breaks down, and you don’t have the money saved up to repair it, as well as bad credit, it can spell bad news for your finances. Whether your car is totaled beyond repair or just needs a few tweaks, it most likely will cost a significant amount of money. Your bad credit will make it extremely difficult to obtain a car repair loan to fix your broken vehicle.

 

House Repairs

Whether you need a loan for roof repairs or for another type of home maintenance, with bad credit it can be near impossible to find a lender that will give you a loan. Roof repairs are also extremely pricey, which means you might not have the liquid cash to foot the bill on your own. You don’t want to be stuck with a leaky roof or some other damage to your house, but having bad credit makes it difficult to take the necessary measures to have a well maintained home.

 

Obtaining Insurance

Insurance agencies usually look at a person’s credit as a determining factor of their risk. If you have bad credit and are seeking insurance, you most likely will be given a very high premium. Unfortunately this leads to a sticky situation, because the high premiums due to bad credit may be too expensive to afford, but the emergencies that must be handled without insurance are even more pricey and difficult to manage with bad credit.

 

Carnival of MoneyPros at This That and the MBA
Yakezie Carnival at See Debt Run
Carnival of Financial Planning at Money Soldiers

3 Comments »

  • Funny Monkey said:

    I absolutely agree with you. Bad credit has many detrimental consequences, and unfortunately for some a lesson learned late. The key is responsibility and calling upon it when needed.

  • adrian said:

    Yep without a doubt – when your in a emergency – and have bad credit – ie no credit card your doomed ….way of the world

  • CGI said:

    In case of a medical emergency, you might be dead. Think about that, this is just sick..