Being in debt effects more than just being able to get credit. Managing your money badly can negatively impact on loads of things in your everyday life too.
Being in debt effects more than just being able to get a credit card or apply for a mortgage. Debt also makes you have a lack of money to pay for everyday living as you’re clearing monthly payments, it makes you argue with your other half because of the never ending burden of not having enough money and it makes you feel down right rotten for getting yourself into such a stupid situation that you could have avoided.
On top of that, you may not realise it but by having a bad credit score, you are potentially damaging more than your chance to get a loan or finance for a car.
Getting a contract mobile phone
Having a contract mobile phone is a type of credit. You take a phone and pay the contract monthly and at the end of the contract, you have paid the phone or tariff off.
When you apply for a mobile phone you have to have a credit check done to see if you can afford to, and you will, pay your monthly bill.
If you have a very poor credit score, this could affect you getting a mobile phone contract but wouldn’t stop you getting a SIM only phone instead.
Signing up to TV services
Sky TV, Virgin, BT TV are all supplied on a credit basis. You sign up to a contract for say 12 months and pay back the debt on a monthly basis. A TV package may not feel like you have a debt, rather another household bill but, if you stop paying part way through, you will be liable to pay the whole years’ worth of the bill.
When you take out a TV package with a provider, they will normally carry out a credit check just to make sure you can pay the bill.
Renting a home
You’ve seen the small print on TV adverts where they say that your home may be at risk if you can’t keep up with loan payments, or whatever other credit product they are trying to sell you in their 30 second advert. Although these ads are aimed at mortgage holders, if you have bad debt then your chance of getting a private rented home is badly dented.
As part of the process of renting, you need to undertake a credit check and if you have a poor credit history, the landlord may consider you too much of a risk, will worry that you won’t pay rent monthly and probably refuse to rent to you.
A way around this is to see if a family member or friend will be a guarantor for you, this way, the landlord has someone else, with good credit, to go to if you default on rent payments.
Landing a job or keeping your job
Having bad credit won’t have a negative impact on all jobs but there are some that you are not going to be able to do if you have a poor credit history. If you get into debt while working in certain jobs, your employer could use this as a reason to end your employment, especially if you have CCJs or go bankrupt.
The types of jobs that this would affect are jobs in a bank, working in a finance position like an accountant, working as a police officer, working in legal jobs, some jobs in the gambling industry, working in roles that need to be FSA registered (like a mortgage advisor or IFA), some jobs in the civil service, jobs at a security firm, if you wanted to be on the board of governors at a school or place of education, an estate agent, a trustee of a charity or, for those of you who fancy it, a Member of parliament.
Your mental health
So much has been done recently to raise the awareness of mental health and has removed the taboo that used to surround it. However, still more needs to be done and I’m sure it’ll continue to be that way for some time.
Getting into debt in the first place may have been due to a mental health issue and being in debt can have a huge impact on someone’s mental health. You can feel hopeless that you won’t get out of the situation, out of control that there is absolutely nothing that can be done to sort out the money problems, you will probably not sleep properly and may just be anxious or depressed.
What doesn’t help is the thought of having to pick the phone up and talk about something you are totally embarrassed about with a creditor that just gives you a hard time. Some creditors are not sympathetic and don’t listen but others are really nice!
Please don’t let financial worries take over your life – really, please!
You can get free debt and money advice from Stepchange (call free from a land line on 0800 138 1111 or go to their site and ask for a free callback) or National Debtline (call them for free from a land line on 0808 808 4000 or use their online web chat service).
But, before looking at your finances, take care of yourself! If you are suffering with depression, or really feel like you can’t cope then go and see your GP or speak to a helping like Samaritans (08457 90 90 90) for confidential, non-judgemental emotional support.
Rather than totally scaring anyone off from having debt at all, having manageable debt can be good debt.
If it’s an amount that can be paid back in full each month, or can be paid back when you agreed to it good and will go on to build your credit score. Having bad debt but not paying it back when you said you would and defaulting will seriously affect things you may not have thought about.
So, the best way to not stop living is to either not get into bad debt or to clear your debt as soon as possible.
Ricky Willis is the original Skint Dad. A money-making enthusiast, father, and husband to Naomi. He is always looking for unique ways to earn a little extra.