If you need reminding regarding the importance of keeping your credit scores high, this article is a quick reminder of the harms that low credit score can inflict in your personal financial life. Here are the top five ways that a bad credit score can harm you.
1. You Might Not Be Able To Rent The Apartment You Want
It’s a common practice for landlords to ask for credit scores for people applying to rent. This makes a lot of sense, because if you’re the landlord, you don’t want to be in the position where your tenant skips out on you, and you have no recourse except for, of course, the deposit. The landlord needs to weed out bad tenants and he does this by checking their credit scores.
You can eliminate a lot of the drama by doing a credit score or a credit history check on the person. Because like it or not, credit scores reflect your overall credit risk – the better your score, the higher the chance that you’re going to pay your bills and that you would be a good person to rent to.
2. Your Credit Cards Will Have A High Interest Rate
If you have a low credit score, chances are, you might not get a credit card with a low interest rate. You would still get a credit card; that’s not a problem. In fact, people who’ve declared bankruptcy still get credit cards in America.
The problem is, getting the right kind of cards. These cards of course are the ones with low interest rate and you, probably, will not get those offers if you’re a bad credit risk.
How do banks find out if you’re a bad credit risk? Your credit score. The same goes with getting a limit increase on your credit card. If you have a low credit score, your credit card limit would be quite low.
3. It May Hurt You When Applying For A Job
There are certain very sensitive jobs that require backgrounds checks, and, oftentimes, these background checks also look into your financial records.
It would look really bad for certain jobs that involve money and credit security, if your credit score is quite low. There have been many people that didn’t get jobs because of a low credit score.
4. You Might Not Be Able To Get A Mortgage
When time comes for you to buy a home, and you need to take out a loan, you will need to get a credit assessment and your credit scores will come up again. And guess what, it is the same story as the others above.
Worthiness is determined primarily by your credit score, and if your credit score is low you would have a tough time getting a good mortgage. You can still get a mortgage but the interest rate would be quite high and the terms will be a little bit more oppressive.
A good mortgage with low rates and relatively easy terms would only be attainable with good credit rating.
5. The Damage To Your Reputation
While it’s not as prevalent as before, having a low credit score and being known as a bad credit risk can lower your status and your standing with your friends and family. While your friends and family might be more accepting other people might not be. So friends of friends might be a little bit more judgmental when it comes to this kind of thing. They might think twice when it comes to lending you money.
Keep the harms above in mind so you can focus on keeping your credit score high or working to improve your credit score. There is a reason why people place so much emphasis on credit score. It’s time for you to understand this so you can improve your personal financial life.