Having bad credit is a big disadvantage not only when applying for loans but in many other instances. Have you ever wondered how bad credit affects opportunities in your life?
On this post, let us go over the disadvantages of bad credit.
Applying for a credit card.
The best credit card deals are often reserved for customers with good to excellent credit scores. If you have a low score, it is very likely that you will not qualify for credit cards with low APR or with reward programs. While you can acquire a secured credit card, this type of account requires the submission of cash deposit. In addition, the rate of interest is expected to be much higher than regular credit cards.
Applying for a loan.
Regardless of the type of loan you need, your options will be limited if you have bad credit or below average credit score. Whether it is a personal loan, car loan, or mortgage loan- you can get a better deal if you have an impressive credit. This is why consumers are advised to prepare their personal credit history at least six months prior to their loan application. True, bad credit personal loans, bad credit car loans, and bad credit mortgage loans are also offered in the market. Nevertheless, the rates are generally higher and the repayment terms, more steep.
Did you know that bad credit can hinder employment options? Many employers use credit reports to check an applicant’s background. If your credit history shows negative remarks and delinquent accounts, an employer may get a negative impression about you. On the other hand, an excellent credit rating will surely give an advantage over other job seekers.
Regardless of the type of insurance (auto insurance, home insurance) you seek, you will be in a much better position if you have excellent credit. You can get better rates and insurance terms if your credit history shows an impressive record.
Finding an apartment.
If you’re in search for an apartment or house to rent, you may discover that landlords and rental agencies also check credit reports. You may actually be rejected as a tenant if you have bad credit history or a very poor credit score. In some cases, a landlord may agree to have you as a tenant but you might be asked to submit a higher deposit or down payment.
Applying for utility services.
Utility service companies may also check your credit report when evaluating your application. If you have bad credit, you could be turned down or you might be asked to get a co-signer who can vouch your credit worthiness.