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Debt Management Guide 2008
Bad credit
Bad credit can hurt a consumer in many ways. Understand how debt negotiation and bankruptcy work.
Bad credit
Bad credit hurts in many ways
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Housing
Rental property owners may reject tenant applications with poor credit scores, something only 48 percent of consumers know, according to a CFA (Chartered Financial Analyst) survey.

Utilities
Only 30 percent of the Americans that CFA surveyed know that utilities, too, care about credit scores. Even slow credit indications are enough to slap you with a $500 deposit before the telephone company connects your line or the electric company turns on the juice, Lynch says.

Cell phones
These providers increasingly rely on credit scores to sort the good risks from the bad credit. Bad credit definitely doesn't get the sweetest deals at Verizon. Instead of contract plans that offer more minutes for your dollar and come with a wider selection of phones, those who do not make the cut must consider pay-as-you-go phones.

Elective medical procedures
When Lynch looked into laser eye surgery, the doctor immediately pulled her credit score to see if she qualified for his monthly payment plan. Otherwise, the bill is due in full at the counter.

"They're not denying you service, and if it were a mandatory treatment, this would never come up," she says.

School loans
When Judge John C. Ninfo II, chief judge of the U.S. Bankruptcy Court for the Western District of New York, made a documentary as part of his "get out of debt now" program for high school students, he included the sad story of a student (from Nazareth College of Rochester, New York) who was turned down for a law school student loan because of his FICO score.

He isn't alone. Lynch, too, has watched families' dreams burst when their scores disqualified them from university and federally funded loans. In this case, it isn't a matter of sucking it up and paying a higher interest rate.

"It's black and white. You get financing or you don't," she says. "Not furthering your education is a far-reaching consequence."

Marriage
More than half (52 percent) of CFA survey respondents think a married couple has a combined credit score. Nope. You can't marry your way out of a bad FICO rating, and many times a disparity between partners causes too much tension for the marriage to survive, says Brette McWhorter Sember, author of "The Complete Credit Repair Kit." She personally knows several couples who skipped walking down the aisle over it.

"If the owner-spouse dies, the home and mortgage become part of the estate. If the surviving spouse wants to take over the mortgage, he or she needs to qualify for credit," says Sember. "Most people bank on the fact that they'll live to pay off the mortgage, so this isn't a concern."

-- Updated: June 16, 2008
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