How Will Bad Credit Affect You in Your Daily Life?
February 18, 2019
When we talk about bad credit, we are referencing a negative credit score that a financial institution gives to an individual. It stands for that person’s payment history as well as their ability to pay off debts.
If you find yourself in a position of a sad and low credit score, it means that you have a history of not meeting your financial obligations. It could say that you haven’t been paying your bills, loan repayments or have defaulted on some debts.
The things that will impact your credit score the most is the amount of debt you hold, as well as the timely manner in which you pay your bills. If you have trouble in these areas, you can be sure that your credit score will take a nasty hit.
Having a bad credit score in this day and age can make your existence quite tricky. Here are some of the most common ways such a score will affect you in your daily life.
Credit and Loan Applications
Your credit score indicates the likelihood of you defaulting on a credit card or loan obligation. Lenders regard a lousy credit score as a red flag and will classify you as a risk. At best, you’ll be facing a higher interest rate, and at worst, you’ll be denied credit or a loan altogether.
Some lenders will be willing to offer you a loan, even if you have a terrible score, but you need to be careful. Payday loans or other such predatory lenders will have exorbitant rates and all sorts of hidden fees. You will have to look for a reputable lender that will not take advantage of your situation.
Higher Insurance Premiums
Insurance companies also check credit scores. The reason is that low credit scores sometimes associate with the higher filing of claims. As a consequence, they will charge you higher premiums, regardless of the number of claims you’ve filed.
Difficulty in Getting a Job or Starting a Business
Some jobs, particularly those in higher management or the financial sector, may be out of your reach if you have a bad credit history. Many other employers will check your credit report, not for bad credit, per se, but for signs that could affect your overall job performance.
In this situation, you may be tempted to try and open a business. Unfortunately, however, your negative credit score will mean that you will be limited or denied from getting a loan. It will be the case even if you have a solid business plan to back you up.
Security Deposits on Utilities
A terrible credit score might mean that you will have to pay an upfront security deposit if you want to establish a service (utilities, phone, cable,etc.) in your name. It will apply even if you are on record for paying all of your utility bills on time.
Buying a Car or Renting a Home
If you’re looking for a car loan with damaged credit, the chances are that you’ll be denied. If not, you’ll most likely get a much higher interest rate. Similarly, if you’re looking to rent a home or an apartment, you’ll probably be surprised that most landlords check credit before approving your application. It will make it that much harder to find a nice place or, if you’re lucky, you will only be accepted but with a higher security deposit. Having bad credit will make life all that much harder, and it’s a no better time than the present to fix it. It may take some time to do so, but the benefits are well worth the effort. Illinois Lending Corp will help you navigate this period. We don’t require you to have good credit to get approved for a loan. Apply here and get started today!