Credit Score is a numerical expression based on borrower’s credit history which is record of borrower’s responsible repayment of debts. Having a good credit score is all that matters in today’s fast paced world, you may miss out on many benefits if you fail to maintain one.
Here are 5 ways a bad credit can negatively impact your credit score.
1. New Loans
Loans are the best way to get a huge sum of money in one instance. This attracts an interest rate that needs to be paid while repaying the loan. Failing to maintain a good credit score means you can kiss your dreams of buying a new house or studying abroad goodbye. Because when you apply for a new loan, your credit score will be one of the first few factors to be checked.
If a low credit score is found, then the loan application will either get rejected or you will be charged a higher interest rate. You may also need to show higher collateral in case of a low credit score.
2. Insurance Premiums
Insurance companies also check your credit scores. Timely repayment of loans and lower outstanding debts are what insurance companies are on the lookout for. And so a lower credit score will inarguably result in you paying a higher premium.
3. Renting a House
Renting a new house can also be very difficult if you have a low credit score. Yes, you read that right! Many landlords scan your credit score before they rent their house with excellent amenities and in prime locations to you to ensure a timely payment of the rent.
If you have a bad credit history, then the odds of getting a house are very slim. Landlords whose houses that have a bad infrastructure and that are present in areas where the demand is low may not check your credit scores. But you wouldn’t want to live anywhere like that, right?
4. Finding Employment
The competition to land in a job has increased exponentially in the recent times. And most employers make it a point to check your credit score.
In fact, as per the Society for Human Resource Management Report, 60% of the companies avoid hiring people with low credit score. They are of the opinion that a low credit score indicates lack of ability to manage your finances which can negatively impact your performance at the job.
5. Security Deposit on Utilities
Utility companies – electricity, phone, and cable – check your credit as part of the application process. If you have a bad credit history, you may have to pay a security deposit to establish service in your name, even if you’ve always paid your utility bills on time. The security deposit will be charged upfront before you can establish service in your name.
Save Yourself from These Problems by Keeping Your Credit in Check
Credit Score is becoming an important measure to assess your financial stability. Not having a good credit score could impact you negatively on various fronts as discussed.
Hence, it is advised that you keep your credit payments in check and maintain a healthy credit score. By doing so, you can reap benefits like quick loan sanctions, lower premiums, cheaper insurances and even access a better lifestyle. So get going to improve your credit rankings!