Taking out a loan or using a credit card may seem like it makes life a lot easier, because now you can afford the things that you couldn’t afford before. The problem with this thinking manifests when you are not able to pay, whether in full or partially, and in good time. If you find yourself in either of these messes – that is, late payment or non-payment of debt – then you are beginning to have a negative effect on your credit score. Having a bad credit score means that you are in a lot of trouble financially, and although you might not see it right away, shortly you will feel the effects. Barron Advisors, a company that specializes in loan consolidation, explains how bad credit can affect your life as detailed below.
1. Non-Approval for Loans or Credit Cards
Most people with bad credit get rejected when they apply for a loan, and this can be very painful when you urgently need money. Most of your credit card applications will also be denied if you have bad credit. A few lenders may be willing to give you are a loan even with your bad credit, but these lenders are uncommon and will often charge higher fees in exchange. Many lenders are not willing to take the risk of giving credit to people who have been unable or unwilling to settle their loans with their previous lenders.
2. Denial of Employment
Some jobs are very strict, and most employers will check your credit score before they can consider you for such jobs. For instance, most managerial positions or finance related jobs require someone who has good credit, according to these employers. Therefore, as much as you may be qualified for a certain position in your dream company, your bad credit can cost you that job. If they realize you have gone bankrupt, have high debts, or substantial outstanding bills, they may not have confidence working with you. They will be afraid that your position might affect your performance at work.
3. Landlords May Deny You an Apartment
Most landlords are very strict with their properties and may not be willing to approve you as their tenant if you have bad credit. According to Barron Advisors, you may keep being denied for apartments, and this can quickly become frustrating. If you are lucky to get a landlord who is willing to take a risk, be prepared to pay a higher security deposit than other tenants were asked for, because they won’t risk it without taking precautions.
4. Paying Security Deposits for Utilities
In normal circumstances, people are not asked for a deposit on utilities, but if you have bad credit, you will have to pay these deposits. It won’t matter whether you have been paying your utility bills on time or not, because the utility companies will still require you to pay the deposit. With bad credit, you may also be forced to settle for a prepaid cell phone on a month-to-month contract, and the cost is usually very high. In extreme cases, you might not get this service at all.
5. Impact on Personal Relationships
In most relationships, finance is a tricky subject. It’s not uncommon for couples to get married before ever discussing income, debt and credit scores. However, the problem comes into play when you are trying to take out a mortgage or any other loan together. The spouse with a lower score will definitely affect the other person’s ability to access the things they want, because your ability to borrow together will be affected by the score of both partners.