13 Ways Your Credit Score Is Silently Controlling Your Financial Life
Good credit helps you do important things in life. Want to buy a house or get a car? Good credit makes these goals easier. Banks trust people with good credit more.
Bad credit can stop you from reaching your dreams. It can block you from getting loans, renting apartments, or even getting certain jobs. When your credit is poor, banks see you as a risk.
In this guide, we’ll show you what happens when your credit is bad. We’ll help you understand why credit matters and how it affects your money choices.
Renting An Apartment
Think you can easily rent an apartment with bad credit? Think again. Many landlords and property managers won’t rent to people with low credit scores. Most want a credit score of at least 670.
Landlords are getting stricter. If your credit is poor, you might need to pay extra. This could mean bigger security deposits or paying months of rent in advance. These extra costs can make it hard to move and hurt your wallet.
Bad credit doesn’t just block you from buying a home. It can also make finding a place to rent tough and expensive.
Applying For Utility Services
Your credit score can also affect your ability to get utilities in your name. Many companies check your credit before allowing you to open an account.
A good credit history can make it easier for you to get utility services. Or better said, poor credit makes it harder.
If you find yourself running into this problem repeatedly, it may be time to look at your credit score and see what you can do to fix it.
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Securing A Cell Phone Plan
In the same way that some utility companies check your credit before opening an account, some cell phone carriers will also look into your past charge-off or bankruptcy.
If they find a blemish on your report, they might not be willing to offer you a contract. That said, it’s worth calling around and seeing what plans are available to you, even if the best option is prepaid.
Buying Or Starting A Business
Starting a business is hard when your credit is bad. Banks and lenders want to see that you can handle money well. If you have poor credit, they worry about giving you money.
Most business loans go to people with good credit scores. Lenders see these loans as a big risk. They want to be sure you can pay back the money. When your credit looks shaky, banks will likely say no to your business dreams.
This means you might need to find other ways to get money for your business. You’ll need to work on fixing your credit or look for different funding options.
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Car Loan
Buying a car with bad credit is tough. Banks and car dealers might say no to your loan. If they do agree to lend you money, it will cost you much more.
With poor credit, you’ll likely pay huge interest rates. This means your monthly car payments will be much higher. You might also need to pay a big chunk of money upfront. Some people with bad credit have to pay thousands of dollars just to start the loan.
Sometimes, dealers might refuse to sell you a car at all. Your low credit score tells them you might not be able to pay back the money.
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Getting A Mortgage
One challenge many people with bad credit face when getting a mortgage is securing the necessary down payment or collateral.
Many lenders will require a down payment of 20% or more. (Unless you know How To Buy a House with Little or No Money Down)
20% down can be difficult for many borrowers to afford on top of the other associated costs of purchasing a home.
In addition to the high down payment requirements, lenders may ask for additional collateral to secure the loan, such as stocks and bonds.
Because of these potential challenges, it is crucial to work with a lender specializing in bad credit mortgages who can help you find the best terms for your unique situation.
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Employment
You will face many challenges when trying to get a job with bad credit. One of these challenges is that employers may be hesitant to hire you because they don’t want to take any risks, and having bad credit can make you seem like a risk.
Many employers nowadays run background checks on prospective employees; any bad marks against your name could impact their decision to hire you. Pre-employment credit checks are prevalent for financial or government jobs.
Get Married With Bad Credit
Okay, you can get married with bad credit. But it’s hard. So many marriages fight over money matters. When it comes to money, being in a relationship with someone with bad credit can make things difficult.
Poor credit creates stress, arguments over finances, and can put a substantive strain on the relationship. It’s best for both partners to work on repairing credit issues before tying the knot.
Student Loan
Student loans help many people go to college. They open doors to better jobs and bigger dreams. Many students need loans to pay for school.
Getting a student loan isn’t easy with bad credit. Private banks look at your credit before giving you money. They want to make sure you can pay back the loan. If your credit is poor, banks might say no or charge higher interest.
Get the Best Rewards Credit CardsĀ
You can get a credit card, but having bad credit can make it difficult to get approved for a rewards credit card. Issuers often reserve their most lucrative rewards programs and bonuses for applicants with excellent credit scores.
If approved for a rewards card with bad credit, you may be offered a card with high interest rates and fees, which can limit your ability to earn rewards and manage your finances effectively.
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Get a Personal LoanĀ
Bad credit can make it challenging to get approved for a personal loan. If you are approved, you may be offered a loan with high interest rates and fees, which can make it difficult to pay back the loan, which can lead to further financial difficulties.
Personal loans from banks and credit unions are largely off-limits to borrowers with dings on their credit reports outside of high-interest subprime lenders.
Get a Professional License
Having bad credit can impact your ability to obtain certain professional licenses, such as a real estate or medical license. This can limit your career options and make it harder to achieve your professional goals.
Many licensing boards review applicant credit histories as part of assessing finances and trustworthiness for client-facing roles.
The Most Important Thing You Can’t Do With Bad Credit: Give Up
While having bad credit can be challenging, there are steps you can take to improve your financial situation. By working with a reputable lender specializing in bad credit mortgages, you can find the best possible terms for your unique needs and circumstances.
Overcoming obstacles and achieving milestones like securing a job, purchasing a car, or getting married can help you get back on track and start rebuilding your credit.
So don’t give up. Keep working hard, and you can overcome these challenges and achieve your financial goals.
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