If you have bad credit, then you may not even realize the sort of impact it is having on your life. However, if you take a closer look at your life and your finances, then you will see that a poor credit score is likely hurting you personally and financially. Here are seven ways that a bad credit score is negatively affecting you.
You May Have a Hard Time Renting
Landlords regularly check the credit scores of their potential tenants to avoid those who will likely make late payments. Many landlords will not even rent to those who have made too many late payments on their credit cards or bills, as they want to avoid having to go through an eviction process at all costs. Additionally, the majority of landlords will not look at a low credit score in context, which means that excuses will simply not fly even if they are good ones.
You Have a Hard Time Improving Your Life
The lack of life improvement is often the most frustrating component of a low credit score. Having a bad credit score can keep you from improving your life, as it holds you back from a whole slew of things. For instance, it can prevent you from holding a job or from being able to purchase or lease a car so you can get to work conveniently. In fact, it can even keep you from the ability to go back to school so that you can attain a promotion or a higher-paying job.
You Have More Stress in Your Life
Bad credit can cause the enjoyment to be squeezed out of your life. You may start fearing the ring of the telephone because it could be a debt collector, or fear using your credit card at the risk of it getting declined. You may even stress about making ends meet because you do not have the finances to purchase your necessities. Bad credit can cost you dearly, as the stress of it can keep you from enjoying your life and enjoying the little things because you are always worrying about money.
You May Find It Hard to Buy a House
Property management companies will screen potential tenants before giving them the keys to a house or apartment. If you have bad credit, then you likely will have to pay a much larger deposit or may, in fact, have your application declined altogether. If you want to purchase a home, you must have a credit score of at least 740 to be eligible for the best mortgage rates. If your credit score is below 640, not only will your rate be higher but you will also have much more limited loan options, which potentially will make purchasing a house out of reach.
You Experience Limited Mobility
You cannot purchase a plane ticket with cash these days. If you are unable to fly because of your bad credit, it can cause a whole slew of issues like missing weddings, funerals, and other important family gatherings because you are unable to travel. On top of not being able to see your loved ones, having a low credit score can keep you from being able to get the best credit cards for travelling, which allows travelers to save hundreds if not thousands of dollars.
You Have Higher Interest Rates
When you can still borrow money despite having a bad credit score, lenders think of you as a higher credit risk. This means that loans for bad credit will come with much higher rate to lend you money in order to decrease your risk factor. Having higher interest rates for your credit cards can add hundreds, sometimes thousands of dollars to your debt, which takes money directly out of your pocket and digs an even deeper financial hole.
Your Insurance May Be More Expensive Than If You Had a Higher Score
Insurance companies look at credit scores and reports when they determine the pricing coverage for homeowner and auto insurance. Those that have higher credit scores often are given discounts. On the other hand, with a score that doesn’t meet the insurance company’s threshold, you’ll likely miss out on the discount and thus have to pay a steeper rate. In some cases having a bad score may even deny you from coverage altogether.