Bad credit can be extremely damaging for anyone, and it’s important that you know how. There are quite a few potentially negative side-effects of a low credit score, and it can impact a lot of aspects of your live in a bad way. The more you learn about how important your credit score is, the more serious you are likely to be about maintaining it.
Higher interest rates on loans and credit cards
The fact is that having bad credit can be a huge deciding factor when it comes to how much credit you pay on a loan or credit card. Nobody likes having to pay a lot of interest, and the better your credit is the lower your rate is going to be. A low credit score almost always means paying a higher interest rate, and it’s important to keep that in mind when applying for a loan or credit card.
Being turned down for a loan
A lot of people with bad credit get turned down for loans when applying. While it’s true that having bad credit doesn’t necessarily mean that you won’t be able to get the loan you need, your options will definitely be more limited than if you had good credit. Those who have bad credit tend to have more difficulty when it comes to getting approved for loans, simply because lenders usually view them as liabilities.
Difficulty getting approved for an apartment
When your credit score sinks low enough, you might also find that it’s difficult getting approved for an apartment that you are interested in moving into. These days most apartments run credit checks on applicants, and having bad credit can mean not being able to find a decent place to live. Bad credit might not always stop you from getting approved for an apartment, but chances are you will have trouble getting into some of the nicer places.
Having to pay a security deposit on utilities
Some utility companies make those with bad credit pay a deposit in order to take advantage of the services they offer. This is not true of all utility companies, but more and more of them have started doing this. The size of the deposit that you will need to put down will depend on the company itself as well as just how bad your credit is.
Trouble getting a cell phone contract
Some cell phone service providers are hesitant to allow someone with very bad credit to sign a contract with them. These days a lot of these companies run credit checks on those who are interested in taking advantage of the mobile phone services they offer, so you will need to keep that in mind as well. Although there are firms who offer payday loans with no credit checks, you might be required to make a deposit in order to get a contract if your credit is really bad.
You could get turned down for a job
A lot of bigger companies, especially those in the finance sector, are starting to run credit checks on potential employees. There is definitely a chance that you could get your job application rejected if you have poor credit. Some employers view bad credit as a sign that the person is not dependable or responsible.
Higher Insurance Premiums
If you have bad credit you will also likely pay more for your insurance each month. When it comes to auto insurance, bad credit can really drive up your monthly premium. The better your credit is, the lower your premium will likely be. There are a number of different things that can impact your premium amount, and your credit score is definitely one of them.
You will definitely want to make a point of knowing what your credit score is by checking once a year with the three major credit agencies. By doing this you will know what your chances are of getting a loan or reasonable interest rate on a credit card. It’s also a good idea to start improving your credit as soon as possible if it’s gotten bad. The more you improve your credit, the easier your life will be overall. You will certainly be glad that you took the time to do this.