Bad Credit Won’t Kill You: Here’s What You Can Do
Published in
4 min readDec 22, 2022
Personal finance experts sometimes make it seem like your credit score is one of the most important aspects of your financial future. But is that really the case?
The truth is, bad credit won’t kill you — and there are many steps you can take to repair your score and make ends meet in the meantime.
Why Bad Credit Won’t Kill You
Let’s start with the good news. Bad credit isn’t going to ruin your financial future forever. Having bad credit can hold you back in a number of ways, but there are several good reasons for optimism:
- Credit doesn’t control everything. First, remember that credit doesn’t control everything. It’s true that a number of institutions will be able to see your credit score, including banks considering lending to you, prospective employers, and even landlords. But many individuals and institutions are willing to make decisions without taking your credit score into consideration. For example, you should be able to find a steady job even with a bad credit score, and many landlords will be willing to overlook your credit score if you can prove your financial stability in other ways.
- Certain loans require no credit. One of the biggest obstacles people with bad credit face is finding a reasonable loan. But some types of loans are available even if your credit score is low. For example, pre-settlement funding is a type of loan available exclusively to plaintiffs in personal injury cases; you can get access to money no matter what your credit is this way. Also, there are usually financial products available for people with bad credit scores, but fees and interest rates are higher as a result.
- You can build good habits with bad credit. No matter how bad your credit score gets, there’s always time to build better habits. Even if you don’t qualify for the loans you want, you can still practice budgeting, improve your spending habits, generate more revenue, and put yourself in a much better financial position.
- There’s always time for recovery. Having a bad credit score might make you feel like things will never get better, but your credit score can improve relatively quickly. As long as you spend the next several months working hard to improve your finances, you can start turning things around.
What You Can Do With Bad Credit
What can you do with bad credit?
- Review your credit report and dispute errors. If you haven’t already, now is a good time to review your credit report and look for any potential inaccuracies. If you find any errors or misrepresentations, you can report them. In some cases, this can result in a near-immediate boost to your credit score.
- Maintain your existing accounts. People who have a low credit score because of poor credit card management habits are often tempted to close those credit cards permanently. But it’s usually better to maintain your existing accounts. After all, the age of each account plays a role in determining your credit score. It’s better to use these accounts responsibly than to simply close them.
- Save and avoid new debt. Do your best to avoid taking on new debt. You should budget carefully, controlling your expenses so they remain below your means. And if you’re having trouble making ends meet, consider picking up another job or investing in your education so you qualify for a better job.
- Create an emergency fund. Having an emergency fund is a vital step in securing better personal finances. This fund is going to serve as a buffer between you and emergency expenses that could otherwise compromise your budget. If you’re hit with a $500 medical bill or a $600 car repair, you’ll be ready for it — and you won’t have to charge a credit card to pay for it. If you ever have to dip into your emergency fund, restore that fund as quickly as possible.
- Pay all your bills on time (every time). Once you’re in a better financial position, make it a point to pay all your bills on time, every time. Your ability to pay bills on time is one of the most important factors in calculating your credit score. Don’t let a single payment go by.
- Start paying down other debts. At this point, you’ll be ready to start paying down your other debts. Reduce your living expenses so you have at least some money left over every month and use that leftover money to gradually chip away at your debt.
If you have a bad credit score, don’t see this as the end of the road. Instead, see this as an opportunity to learn from your mistakes and set a course for a better financial future for yourself. With a few changes to your personal finances, and a bit of patience, you’ll eventually find yourself in a better situation.
