1. Negative effects of a low credit score
Are you one of those people who think that having a low credit score will have no effect on
their lives? Well, think again. Having a low credit score can truly affect future transactions,
businesses or even your job. Here are a few examples of how a poor credit score can affect
your life.
1. High interest rates- When you have a very poor score, lenders and banks will be
hesitant to approve your loan. They will see you as a risk because they think that
you’ll be having trouble paying them back or you won’t pay them back in time. When
you have a good score, the interest will usually fall 3% or below, with a low score it
will twice as that.
2. Difficulty with credit and loan applications- As stated above, lenders and banks will
see you as a risk. With a low credit score, denied applications are not uncommon.
You’ll either be denied or, you’ll get the loan but with a very high interest. This is not
a good disposition because if you do go for it, you’ll be paying more on the interest
rather than saving the money for something else.
3. Employment difficulties- Yes, that’s right! Companies often do a background check
on their employees, especially for high job positions. They will check it for debts or
outstanding bills and these may affect your application.
4. Security deposits- Utility companies will check your credit history as well. If you have
a lot of bad marks on your record, they will surely ask you for a deposit even if you
have paid your bills regularly.
5. Difficulties in starting a business- Most entrepreneurs need a loan in order to start
their businesses. A poor score can limit the amount you can borrow no matter how
promising your idea seems.
These are just a few of what a low credit score can do to your plans. But if these still did not
catch your attention, then you better research more about the benefits of a good credit
score. Maybe then you’ll think about improving your credit.
If you are thinking about improving it already, then be sure to check out your credit report
regularly. Make sure to clear off errors and as soon as your bill arrives, pay for it
immediately. That’ll help you boost your score and prevent negative marks from ruining your
history.