Credit cards provide a lot of spending power. They allow people to buy goods and services that they otherwise would not be able to afford. However, the spending power of credit cards comes with great responsibility. Many people fall into the trap of accumulating more debt than they can afford, which causes them to have bad credit scores. Bad credit can come back to haunt people in the long run.

The Effects of Bad Credit

1. Less Preparation for Emergencies

Life sometimes takes on a life of its own. Important household items break, injuries happen, illnesses come about, or even loved ones pass away. Emergencies often require a large amount of money for replacements, medications, medical procedures, funerals, etc. People who have bad credit will have a small -if any- credit line and less cash to turn to in the event of an emergency.

2. Everyday Spending Can Become Tighter

Everyday costs (e.g. a morning cup of coffee from a convenience store, gasoline, going to a movie, lunch at a fast food restaurant, etc.) may seem small in the moment, but they accumulate a lot of expense when added up over a period of time. Having to pay back a large amount of debt and not having a credit line to turn to can restrict everyday spending.

3. Loans May Cost More or Be Harder to Get

Most people cannot afford to pay the full price of a car, home, or education. Items or services that good thousands of dollars require borrowing for most people. Getting loans is all about credit scores because credit scores show people’s reputations of how good they are about paying back borrowed money. A bad credit score shows a loan company that they need to tread careful because the prospective borrower does not have a good reputation for paying back borrowed money. Getting a loan with a bad credit score may mean higher interest rates or even not being able to get a loan at all.

4. Harder to Get a Cellphone Contract, Job, or Place to Live

Many cell phone companies are running credit checks on their customers before starting a contract with someone or approving a new contract. Some employers are starting to run credit checks to prospective employees because they believe job performance and credit scores are correlated. Landlords and mortgage companies are definitely credit score crazy because they need their money.

5. Less Money for Luxuries and Future Investment

In addition to less money for everyday disposable income, less money for luxuries (e.g. vacation, furniture, electronics, recreational classes, etc.) and future investments (e.g. retirement, children’s education, beach houses, etc.) also comes with bad credit. Bad credit can easily rob someone of the life that they deserve.

6. Strained Relationships

Bad credit can cause much dissent in marriages and domestic partnerships. Parents may take their frustrations out on their children. Having bad credit may cause people to turn to their friends and family for money, which can brew resentments, jealousy, and feuds.

Maintaining Good Credit

Maintaining good credit is the best way to avoid the ramifications of bad credit. People can avoid bad credit by limiting the amount of money they charge on their credit cards, saving money to pay cash for major investments, putting money away towards an emergency fund, and tracking their credit score. However, people who do find themselves in the dilemma of bad credit can resolve it by filing bankruptcy, participating in debt forgiveness programs, and working vigorously to pay their credit cards off. Having good credit will pay off.