5 Risks of Low Credit Scores
It’s understandable that in tough times when money is in decline, we may search for solutions that unfortunately leave bad effects on our credit score. However, there are risks to keeping a low credit score, as we will discuss next. Keep them in mind so that you can help prevent it from happening and experiencing the disadvantages that follow.
Higher Interest on Loans
With a low credit score, you are seen as more of a risky borrower as opposed to people with high credit scores. If loan companies can see that your credit score is low, then they will tend to charge higher interest as there is more chance you will make late repayments. This way, these companies can make better profits and exploit you more.
Loans Not Being Approved
Certain loan companies will be more likely to accept the risk, however, if there are too many bad marks on your file, loan companies may decide to reject your application altogether. This is a huge set back if you are trying to start your own business in particular and are applying for a loan as part of your business plan. If you find yourself in an emergency and you have been declined by multiple loan companies, try looking for bad credit payday loans instead. Look at this site for more information on loans for people with lower credit reports and how to get money fast without being denied.
Problems Starting Contracts
Upfront and monthly costs in mobile phone contracts may increase due to lower credit ratings, whereas some network companies may deny you straight away once your credit check has been made. This is important to bear in mind when setting up any new direct debit or looking for a contract.
Difficulty Finding Property
Before renting a new property, landlords tend to run credit checks during your application process. If they notice a lower credit score, this may result in paying higher deposit fees at the start. Although this will vary depending on the type of property you’re renting – and your landlord – it may be useful to take a look at some tips on how to rent an apartment with bad credit before going ahead with your rental application.
Denied By Employment
Although your future employers don’t check your credit report, they can see your credit score, and if this is considerably low, you may be turned away from the job altogether. This risk will be even higher if the score is due to any bankruptcy or outstanding bills. If you are looking for any roles in higher management or anything to do with finance, they are more likely to expect a higher credit score, therefore this is vital to remember in your job search. For more advice on this topic, have a read of some helpful points to consider before applying to be in finance.
Taking on board all the negative impacts of having a bad credit score will hopefully set you on the right track in improving your score and preventing it from decreasing in future. Being aware of these consequences and having regular credit checks will change your finances for the better.