If you have bad credit, it could have happened from simply making late payments. Issues like bankruptcy, foreclosure, and judgments can also make a strong impact on your credit score.
So, how exactly does having poor credit make your life harder? Read these credit facts to learn about five important ways.
- Denied Credit Applications
Whether you need a personal loan to pay a medical bill or want to buy a car, having poor credit will hurt your application. When the lender looks at your credit report, they can deny you entirely if you have a bad credit score, have unpaid debts, or have filed for bankruptcy recently.
And you might be wondering, “Does debt consolidation affect your credit score?” It sure can hurt your score and approval odds if you’ve got defaulted debts or continue to build up debt.
- Higher Interest Charges
While it’s not impossible to get credit with a poor credit history, you’ll likely suffer in another way. Your lender will often charge you higher rates, meaning you’ll pay much more over time and can face larger minimum payments. And if you get a special credit card for someone with poor credit, you may also end up having to pay added fees just to have that card.
- Problems Getting Housing
Whether you want to buy a place or just rent an apartment, lenders and landlords usually include a credit check as part of the application process. Being a homebuyer with bad credit can mean having limited options for a mortgage, needing a larger down payment, or getting denied entirely. If you’re wanting to rent, your landlord may charge a higher security deposit if they do decide to rent to you anyway.
- More Expensive Insurance Premiums
You might find it surprising that your credit score can even impact how much you pay for insurance on your home and car. When your credit report shows missed and late payments or bankruptcy, you’ll likely find that your monthly insurance premiums run higher than they do for another person who’s got good credit. This applies even if they chose the same policy you have.
- Difficulties With Employment
Depending on your state, you might find it harder to get hired if you have a poor credit history. Often, employers use this information to see how responsible and organized you are. And if you’re applying for a job in a field like finance, you might get turned down if you show problems managing your own money.
Know These Credit Facts and Improve Your Credit
Understanding these credit facts about the impact of a bad credit score shows you that it’s worth taking action to boost your score today.
Begin with making on-time payments and bringing any defaulted accounts up to date. At the same time, avoid adding more debt or applying for more credit accounts if possible. You might also consider making extra payments to cut your balances.
Now go check our other posts for even more personal finance tips!