Do you have a low credit score? If so, it may be costing more than just money. Learn about all the ways this can affect your finances and how to fix it!
Ignoring a bad credit score can be easy, but there are some serious consequences. For example, you may spend an unnecessary amount of extra money throughout your life because of that low rating and end up being denied loans or opportunities for something big when it matters most.
Bad credit is costing you more than just a few dollars. It can really affect the quality of life for people who have bad debts, and it’s not always easy to figure out exactly how much these hidden expenses cost until they arise in some area or another – like higher interest rates on mortgages and car loans or higher insurance premiums.
How having bad credit can cost you
High APRs on loans and credit cards
There are many ways bad credit can cost you money, the most obvious being high interest rates. You won’t be able to get approved for new loans and if your application is accepted then expect an even higher APR which will make it more expensive to carry a balance in general.
Limited access to regular financing
It’s hard to get approved for traditional loans when your credit score is below average. Whether you need a personal loan or want to apply for one of the best possible terms, things will be more difficult with reputable lenders and securing favorable agreements in place of getting rejected out-of-hand from every single company that offers them.
Ongoing cash crunch because of large minimum payments
Bad credit can make your life a living nightmare. You’re constantly getting hit with high-interest rates and making payments on time that are never enough to cover those costs, not even close!
Your lack of cash flow may hinder your ability to pay other bills on time, which would result in late fees and credit dings. Even if you are able to afford the payments regularly without issue now; saving aggressively may not be an option for future emergencies because all extra money spent goes towards high-interest debt rather than being saved or invested into stocks/bonds.
More expensive insurance premiums
It may surprise you to discover that insurance companies typically run a credit check before issuing policies. The reason is that research shows those with lower scores tend to file more claims than higher-rated drivers, resulting in them paying a higher premium for auto coverage.
If you’re looking for a way to save on car insurance, increasing your credit score might just do the trick. The Zebra’s 2019 State of Auto Insurance Report reveals that raising one tier can reduce premiums by 17%.
Difficulty qualifying for housing—Whether buying or renting
Your credit score plays an important part in both buying a house and renting an apartment. When you’re looking for the perfect place, lenders will check it before approving your application so they can give accurate rates that fit what’s best for each family member based on their needs! Even though FHA mortgages require bigger down payments than other types of loans do (up to 20%), having bad or low scores could still make things difficult if not impossible when trying to qualify financially with these options available because those who have them might need even more cash upfront then others would without this problem.
Deposit requirement for utilities
When you sign up for a utility company, they may run a credit check to make sure your finances are in order. If they don’t like what they see? They may require upfront deposits! That means more money coming out of your account and more complicated repayment schedules on top of whatever other costs are already there when you sign up.
Limited job opportunities
In order to get ahead in the workforce, it pays off if you maintain a good credit score. If an employer finds out that there have been some mistakes on your report (which could be due to identity theft) then they might not want to hire or promote someone with bad habits like this!
Many companies perform background checks before giving employment opportunities so make sure yours doesn’t have any restrictions concerning where jobs can come from – including finance firms and law enforcement agencies… government jobs too!
Your credit history is a big deal. As you climb higher on the corporate ladder, your employers are going to want it and they’re more likely than ever before in this day and age of growing corporate fraud awareness to check for bad scores – poor marks could limit job growth or long-term earning potentials.
But there is good news!!
Bad credit certainly does add a lot of expenses to your life. Luckily, your credit score doesn’t define you, and even better, it’s not permanent.
Follow these tips to improve your credit, either when starting from scratch or rebuilding after negative entries appear on your credit report.