You need good credit to survive in today’s economy. It is so easy to fall behind on bills and watch your credit score drop. Sadly, many people don’t even realize the impact that a bad credit score has on them.
Those with poor credit have probably noticed their interest rates have increased. Did you know that someone with a credit score of 630 may end up paying over 1.5% more than someone with a score of 760? Now imagine having a credit score of 539. Poor credit costs you a lot more in the long run. Also, you will be turned down for many great discounts if you don’t keep your credit score up.
Having to pay high interest rates on your loans isn’t the worst thing you have to worry about. A poor credit score may keep you from being able to get a loan at all. Most people can’t buy a new car or house with cash. If you can’t take out a mortgage for a new house, you will be stuck renting until your score improves or $100,000 suddenly falls on your lap.
Of course, renting will cost you much more in the long run. Over the long run, a homebuyer with average credit can save $2,500 every month. The first time you are denied a loan, you know you have a problem. It’s time to fix your credit score ASAP.
Paying higher interest rates and getting turned down for loans are problems people with bad credit may expect. However, there are additional disadvantages they may never have considered. These include:
- You might not get an apartment. Most people expect poor credit will get in the way of their dream of owning a house. They never consider that they won’t be able to get approved for an apartment. Many landlords conduct background checks and will turn away applicants they feel won’t pay up on time.
- You can’t get a job. Landlords aren’t the only ones who do credit checks. Many employers want to know your credit as well. One employer has actually been quoted as saying that there are two things he looks for when he considers an applicant: their character and their credit score. You can actually get yourself in a viscous cycle of financial hardship if you can’t improve your credit score because you don’t have a good job to support it.
- You pay more for electricity and cable. These companies also get nervous with customers who have not proven themselves to be responsible. They may require larger security deposits.
- Insurance premiums skyrocket. The insurance industry also doesn’t hesitate to run credit checks. They aren’t so concerned that you won’t pay your bills on time. They adjust their premiums to customers who are more likely to file a claim. Those with low credit scores are statistically about twice as likely to file a claim and may have to pay an additional $150 a month.
Having a poor credit score can cost much more than you would expect. It doesn’t only result in higher rates on your credit cards. A bad credit score can literally ruin your life. Get caught up on your bills and start managing your money more effectively.