How Bad Credit can Affect your Life

While no one wants to end up with bad credit, many people have this problem when they forget to pay a debt or get a little behind in their bills. For many 18 year olds, the discovery that banks will suddenly hand them credit cards can make them feel like they suddenly have access to “free money” without any classes that offer financial literacy can be a combination that results in poor financial choices.

Many young people will take their credit cards and use them for large purchases like furniture, TVs and even cars. Often they don’t understand what these interest rates mean and how much extra they’ll need to pay, so they fail to pay off the balance of the card, leading to more fees which quickly accumulate and feel overwhelming.


It’s not uncommon for people in their 20’s and 30’s to be $20,000 or even $30,000 in debt from the choices that they made when they were younger. This can greatly impact the opportunities they have for the rest of their lives, preventing them from being able to travel, move overseas, hold out for a more rewarding job, purchase a car or buy a house.

Luckily, there are a few ways people can get loans with bad credit. These loans will have higher interest rates, as people who have bad credit are seen as being a higher risk borrower. However, they’re also designed to help people rebuild their credit, allowing you to quickly access money if you have an emergency.

One common way to quickly get some cash is to use a payday loan. This type of loan is actually an advance through your checking account and you pay it back the next time you get paid. These companies may have physical locations or may also just operate online, and the loans can last for a week or a month.

The interest rates for these types of loans are around $15 per $100, however they’re also super easy if you need to be approved quickly and you won’t need a credit check to get the loan.


Peer-to-peer lending is also popular, and if you’ve got bad credit you’ll find that it’s a good option for you. These type of loans are good because they don’t have the tough guidelines that banks need to follow, and the rules are instead made by investors. The interest rates will typically be lower than most banks, it’s easier to get the loan and you’ll quickly learn whether or not you’ve been approved. Lending Club is a good example of this.

Title loans basically mean that you’re putting up something that you own as collateral. So if you own a car, you’ll find that you hand over the title of your car to the lender who will keep it until you pay the loan back. The good thing about this is that you would still be able to use your car as you would normally.

As you can see, while there are plenty of ways that bad credit can affect your life, there are also many solutions which can allow you to borrow money- even if you have bad credit.