Let’s say you forget to pay your credit card bill next month. You know you’ll have to pay interest—no big deal, right? Well, unfortunately, something as simple as not paying your credit card on time can worsen your credit.
Just how badly can poor credit affect your life?
Here are some ways in which bad credit can hurt you:
1. You’ll be dinged with higher interest rates and/or restrictive terms.
Creditors and lenders may deem those with poor credit as “risky.” They may charge you with a higher interest rate than those with better credit scores. These high interest rates may result in you having a harder time paying off a loan. Certain restrictive terms may also be associated with loans to those with poor credit, further reducing your financial freedom.
2. You’ll have a hard time getting a cell phone contract.
Cell phone carriers pay attention to the financial health of potential customers, which may determine whether or not their cell phone contract gets approved. Those with poor credit are considered to be at a higher risk not to pay their bills on time or not have money available in their bank accounts for their auto-payments.
3. You’ll have a harder time renting an apartment.
Many landlords will require a credit check before a lease is offered to a potential tenant. This is a fairly standard procedure, as landlords may interpret a good credit score as assurance that rent will be paid on time every month. So, those with poor credit will less likely be able to score that dream apartment.
4. Or worse—you might not be able to get that mortgage
A mortgage is a loan from the bank or financial institution specifically designed for the purchase of a home. Without a good credit score, you may not be able to get approved for a mortgage because poor credit history suggests that you can’t (or won’t) make your mortgage payments on time.
5. Insurance companies may charge a higher premium.
Insurance companies will also check your credit. Poor credit is correlated with you filing more claims. Ultimately, it’s a protective measure that insurance companies take, but it also means that they will charge a higher premium based on this logic, regardless of whether or not you actually file claims.
6. You won’t be able to get a car.
Want a new car? Well, chances are, you will have a difficult time getting a car loan if you have bad credit. Similar to why it would be hard for you to get a mortgage. If you have a low credit score, banks and financial institutions want to ensure that you will be able to pay them back in a timely fashion. While there are institutions that may approve those with poor credit, it will come at a cost: higher interest rates, which may make it harder for you to make your monthly car payments.
7. You might not be able to get that job.
Though this isn’t a common practice across the board, certain jobs that require good credit will indeed look into your financial health. You may lose out on an opportunity due to any number of negative items on your credit report. Such jobs are less concerned about your actual credit, but rather, it may reflect things in your life that will affect your job performance.
Having poor credit can have an enormous ripple effect on your life, which is why good financial health is so important. Learn more about why a good credit score is important here
ClimbLoans is here to help you get on a positive track to financial help. Beyond credit builder loans, our consultants can also help customize a plan specific to you to help you rebuild your credit to match your savings and future financial goals.
Learn more about how ClimbLoans can provide you with a credit builder loan and more, and call us at 1-844-500-9898.