Credit Scores & Credit Monitoring What To Do About Bad Credit Building Credit 15 Reasons You Need to Fix Your Credit By LaToya Irby LaToya Irby LaToya Irby is a credit expert who has been covering credit and debt management for The Balance for more than a dozen years. She's been quoted in USA Today, The Chicago Tribune, and the Associated Press, and her work has been cited in several books. learn about our editorial policies Updated on April 11, 2022 Reviewed by Ebony J. Howard Reviewed by Ebony J. Howard Ebony Howard is a certified public accountant and a QuickBooks ProAdvisor tax expert. She has been in the accounting, audit, and tax profession for more than 13 years, working with individuals and a variety of companies in the health care, banking, and accounting industries. learn about our financial review board Fact checked by Emily Ernsberger You might think bad credit only keeps you from getting a credit card or loan, but it goes further than that. Bad credit can leave you homeless, carless, and jobless. That's because more and more businesses are using your credit to make decisions about you. Still not convinced it's time to get your credit act together? Here are 15 reasons you need to fix your credit. 01 of 15 Save Money on Interest Dream Ideas / Getty Images Low credit scores typically mean higher interest rates, and that means higher finance charges on your credit card balances. Repairing your credit would allow you to get a more competitive interest rate and cut back on the money you pay in interest. 02 of 15 Stop Paying High Security Deposits Utility service providers and even phone companies check your credit before allowing you to establish service. To offset the risk of a default, those service providers charge you a deposit. Making your payments on time will allow you to get your deposit back. Improving your credit score keeps you from having to pay the deposit altogether. 03 of 15 Get a Lower Insurance Rate Believe it or not, your credit affects your insurance premiums. This includes auto, life, and home insurance. A bad credit history means you'll pay more for insurance than you would if you had better credit. 04 of 15 Stop Paying Cash for Everything If you have bad credit, you'll have a hard time getting a credit card, which means you'll end up paying cash for everything. It may not be a nuisance until you need to do something like renting a car, where you have to pay an extra deposit if you don't use a credit card. 05 of 15 Get a Higher Credit Limit Generally, as you demonstrate you can pay your bill on time, your creditors will increase your credit limit. But, a credit card issuer will check your credit score before increasing your credit limit. A bad credit history might get your credit limit cut hurting your credit score even more by raising your credit utilization. 06 of 15 Stop Debt Collector Harassment Repairing your credit includes paying off those debt collection accounts. Until you do, you face relentless calls and letters from debt collectors. While you can take action to stop debt collector calls, collection accounts often move from one debt collector to another. When a new collector gets your debt, you'll have to go through the process of sending letters to stop the calls all over again. 07 of 15 Feel Better About Your Credit Score After you repair your credit, you won't have to be afraid of checking your credit score or worse, having someone else check it. You can have confidence knowing you have a healthy credit score. 08 of 15 Buy a New House Homeownership has always been the American Dream. Bad credit is the nightmare that keeps you from realizing that dream. Many banks won't lend you a mortgage until you've repaired your credit. Those that will approve you with a high interest rate that makes home ownership cost a lot more. 09 of 15 Rent an Apartment Not only can bad credit keep you from buying a home, it can also keep you from renting an apartment. Many landlords now check credit to determine the likelihood that you'll be late on your rent. Bad credit could get your rental application denied. 10 of 15 Buy a New (Or Newer) Car Auto lenders are among the many businesses that check your credit before lending to you. Without a good credit score, your auto loan application could be denied leaving you to drive the same vehicle. 11 of 15 Get a Job Employers check credit before deciding to hire you. Some government, financial, management, and executive jobs are particularly curious about your financial history. A bad credit history could cost you the job, or the promotion you've been working hard to get. 12 of 15 Take Some Financial Pressure off Your Spouse When one spouse has better credit than the other, the spouse with good credit will be the one applying for the loans and credit cards. Improving your credit will let you bear some of the credit-brunt rather than placing it entirely on your spouse. 13 of 15 Stop Relying on Co-Signers When you have bad credit, you'll often need others to co-sign for your loans and credit cards. If you can find someone to co-sign, you're putting financial pressure on them but they don't receive any of the benefits. Repairing your credit will save you the time and hassle of burdening someone else with co-signatures. 14 of 15 Start Your Own Business Starting a new business takes money, so many entrepreneurs rely on small business loans to get their businesses off the ground. Bad credit can keep you from getting the financing you need to start your new business. You'll have to improve your credit before a bank will give you a loan. 15 of 15 Protect Your Children's Credit Score Having bad credit can tempt you to use your child's credit. You might think you'd never do that but you never know what you'll do when you're desperate. Say you have to have electricity turned on, but your credit's too bad. You could easily rationalize using your child's credit to have the electricity turned on. Keep your own good credit and you won't think about exploiting your child's. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit