Nobody sets out to bring his or her credit score down, but sometimes things happen. You went through a rough patch, you forgot about some bills, the point is you made a mistake, and now your credit score reflects it. So what exactly are the consequences of having a bad credit score? Here are a few of the most important disadvantages.
Higher interest rates: A loan to someone with bad credit is riskier to a lender because he’s less likely to make future payments on time. If banks and credit card companies are going to accept you at all, you will have to pay more. They’ll charge you higher interest rates than they do those with good credit.
Trouble making big purchases: Before providing car loans, banks will check your credit. If you have a bad score, they might deny you. Car lots that advertise that they don’t check credit usually charge absurdly high interest rates on your monthly payments.
Security deposits for utilities: Any service that requires you make regular payments is interested in your credit. Companies that provide utilities like water, electricity, or cable might demand an upfront security deposit for customers with bad credit.
Denied cell phone contracts: Once again, companies need to be sure you’ll pay in time. If your cell service provider isn’t confident, they can deny you a plan. Prepaid, month-to-month plans are usually much more expensive.
Increased insurance premiums: Statistically, those with higher credit file more insurance claims. This relationship might not pertain to you—you might have never filed a claim in your life– but insurance companies still might charge you a higher premium.
Limited Employment Opportunities: Particularly in the finance industry, hirers care about the way you spend your own money. They may not hire you to management position if you have bad credit.
Difficulty starting small businesses: Starting your own business is always exciting and scary, but bad credit can limit your resources. You may have a great idea and a solid plan, but if your credit is bad, the bank may deny your loan application.
Denied Apartment Applications: Rent is most people’s largest expense, so landlords want to be sure their tenants can and will pay each month. If you have bad credit, they may not feel you’re worth the risk.
As you can see, the world puts a lot of stock in credit scores. If you’ve made a mistake, you probably want to know how to fix your credit. Give us a call today.