If you have a bad credit score, your life can be negatively affected in a number of ways. Here are some of the most common side effects of having a bad credit score.
You are too big of a risk for lenders
A bad credit score can have a number of negative consequences. For one, it can make it challenging to obtain a loan or credit card (check out best credit cards for bad credit).
Lenders view people with low credit scores as higher-risk borrowers, which makes it less likely that they will approve a loan application. In addition, a bad credit score can lead to higher interest rates. This is because lenders see people with bad credit as more likely to default on their loans, so they charge a higher rate to offset this risk.
Insurance premium surcharges
One of the many side effects of having a bad credit score is that you may have to pay insurance premium surcharges.
This is because insurance companies often use credit scores to help determine premiums. If you have a low credit score, the insurer may view you as a higher risk and charge you more for coverage.
In some cases, the surcharge can be as much as 25% of the base premium. This can obviously add up to a significant amount of money over time. Not only that, but it can also make it difficult to find affordable coverage.
Career opportunities may be limited
Your credit score can also have an impact on your career. For instance, if you’re applying for a job that involves handling money, the employer may check your credit score as part of the background check.
A bad credit score may not necessarily disqualify you from the job, but it could make the employer less likely to hire you. In some cases, employers may even require a high credit score as a condition of employment.
Difficulty starting a business
Besides affecting your career, a bad credit score can also make it harder to start a business. This is because many businesses need access to capital and a good credit score is often required to get a loan.
If you have a bad credit score, you may still be able to get a loan for your business, but you’ll likely pay a higher interest rate. This can make it more difficult for your business to be profitable.
Your options for housing are limited
Another common side effect of having a bad credit score is that your options for housing may be limited. For instance, if you’re looking to rent an apartment, the landlord may check your credit score as part of the screening process.
As you can see, having a bad credit score can have a number of negative consequences. It can make it challenging to get a loan, find affordable insurance, and even land a job. Also, it can limit your options for housing. If you have a bad credit score, it’s important to take steps to improve it. With a better credit score, you’ll have more opportunities and be able to save money in the long run.