Having a low credit score can hurt you in a number of ways. It can put you at a disadvantage when trying to get a low rate or even when you’re just trying to get approved for a loan. It can add much unneeded stress to your life and even affect your relationships. The good news is that your credit is not a life sentence because you can improve it with some hard work and discipline. This article provides 5 disadvantages of having a low credit score. The point of this is not to further depress anyone in these financially difficult times, but instead to help motivate and get people on the right track.
- Getting Approved for Credit
Anyone that has had a case of the not so good credit knows just how difficult it can be to get approved. Whether it is for a credit card or a car loan, your credit is everything. Half of the battle in building good credit is to first get approved. To build credit you have to show your credit worthiness and the best way to do this is to get a credit card. That way you can establish a good payment history and start improving your credit. In the event you can’t get approved for traditional credit card you still have options. There are a variety of cards out there for people with bad credit like a secured credit card.
- Higher Rates
When it comes to a low credit score there is one thing you can guarantee, a higher rate. That is if you can even get approved at all! When you have a low credit score lenders are going to see you as a high risk. In order for the lender to take a chance on you they are going to increase the interest they charge you. This means you will end up with a higher monthly payment and end up paying more over the life of the loan. When you have a low credit score it is going to less likely that you qualify for the best offers that are reserved for those with good credit.
- Security Deposits Galore
Have you ever tried to apply for a cell phone with bad credit? If so then you will know that in order to get approved you had to put down a security deposit that wasn’t cheap. Cell phone companies have been known to charge anywhere from $50 to $200 per phone line for people with a low credit score. Utilities companies and cable companies will also charge you a deposit if your credit it not up to par. You could end up having to pay a security deposit to just about every company you have a relationship with and that could get real expensive.
- Getting A Job
It sounds crazy, but potential employers are now checking the credit of job applicants. Who would have ever thought that your credit could now keep you from getting a job. When a potential employer finds out your a credit risk they might conclude you won’t be a good employee. Your credit could determine whether you get hired or not.
- Renting An Apartment
Finding a place to live can be stressful enough without even bringing your credit into the picture. Depending on where you are applying you might have to go through an extensive credit check. Whether your applying at an apartment complex or for a private owned home, you can expect a credit check. It will ultimately be up to the digression of the individual or company approving you, but the lower your credit the lower your chances are of getting approved.