Do you have a bad credit score? There may be a number of reasons why you do, but you shouldn’t accept the fact and then do nothing about the problem. You see, a poor credit score can harm your life in a number of ways, so to improve your tomorrow (as well as your today), you should make fixing your credit score a priority. The following are some of the consequences if you don’t.
When applying for loans or credit cards, you will be seen as a riskier borrower than somebody who has a good credit score. The loan provider may assume one of the reasons why your score is low is because you have previously defaulted on a loan, and will do one of two things. They may turn down your application for a start, or they may still give you a loan, but with a higher interest rate. Neither scenario is a good one.
If you need a loan desperately, you are going to be disappointed if you are turned down. It’s still possible to get a loan – although you may not get as much as you need. And if you do manage to get a loan, but have extra interest piled on, you may increase the risk of debt and the further lowering of your already pitiful credit score.
You may find it difficult to get approved for a rental property. Estate agents (and some private landlords) will do a credit check on you when you apply for somewhere to live. If they see you have a low credit score, you may get turned down, as, after all, they don’t want a bad tenant on their hands who may not be able to pay rent on time.
This sucks, especially when your low credit score isn’t your fault – you may not have had time to build up credit, to begin with, especially when looking for your first apartment.
There are ways to get around the problem. The landlord may ask for a guarantor, meaning there is a financial backup for them if you do have a problem paying rent. Or you may be able to offer a higher security deposit to sway them in your favour. Still, your best bet is to find ways to improve your credit score to improve your prospects.
You may have to pay higher insurance premiums, whether that’s business, car, or any other types of insurance you need to pay. Again, this is because a low credit score is seen as a high-risk factor, despite the fact that you may have never made an insurance claim previously. While this may be an excuse for the insurer to charge you a higher premium, it’s still in your best interest to fix your credit score.
In the meantime, it’s still worth shopping around, so while you may still have to pay higher on your insurance, you can still cut some of the costs by finding a cheaper provider, even if those savings are minimal.
You will have a hard starting your own business, especially if you are reliant on a bank loan to begin your new endeavour. Some banks may still loan you something, but you may have to make compromises on the amount you want to borrow.
It is still possible to fund your business with a poor credit score, and there are some alternative funding options here, and you may also have savings in place to help you start your business at the beginning. However, if you are in need of a sizeable amount of money, and for the future longevity of your business, it is still worth improving your credit score to give you the chance to secure business loan funding during the lifespan of your business.
You will have difficulty purchasing some of life’s necessities and luxuries, especially when you need a loan to fund them. From a holiday to a new car, you may have to do without, unless you can source funding from other sources, such as friends or family, or you start to save up for these things yourself.
In the meantime, your poor credit score will leave you looking green with envy, especially when you can’t afford to do some of the things your friends and family are able to do thanks to their decent credit scores.
You will suffer from a lot of stress, as if you can’t do everything you want in life, you are limiting your life as a result. There are also issues surrounding debt, as you may have red letters arriving on your doorstep, or the threat of debt collectors arriving at your door. Your anxiety levels will go through the roof.
You can combat anxiety on a day-to-day level, such as exercising more and eating a healthy diet, but you really need to fight it at the source. And in this case, it means fixing your credit score, which may include getting a handle on your debts by seeking specialist help from a debt-relief charity.
You will suffer from feelings of guilt, especially when you are forced to borrow money from friends and family. The stress of having poor credit can also lead to arguments at home, and you may do or say things you later regret.
When you aren’t able to give your family what they want and need in life, especially during birthdays and Christmas periods, you will have the burden of guilt hanging over you. Life will become uncomfortable, the people around you will suffer, and you will feel terrible, especially if you have made mistakes that have reduced your credit score.
Still, your life isn’t over. You can still repair your credit score but learn from the linked mistakes to ensure you don’t make matters worse.
Don’t despair if you do have a bad credit score. Read this article to help you turn things around and fix your score. But if you don’t have a bad credit score yet, then don’t do anything that is going to reduce it, using the information in the other articles we have linked in this piece.
Seek help where you need to, and adhere to good financial habits in your life, as you will improve both your score and your life opportunities. Take care, and thanks for reading.
This is a collaborative post.