Your credit score is a numerical representation of your creditworthiness. It is used by lenders to determine the interest rate you will be charged on a loan and can also affect your ability to rent an apartment or get a job. A low credit score can have a number of negative consequences. Here are six ways a bad credit score can hurt you.
1. You Will Pay More for Loans
If you have a low credit score, you will likely be charged a higher interest rate on any loans you take out. This includes mortgages, car loans, and even personal loans. The higher interest rate means you will end up paying more for your loan over time.
2. You May Have a Hard Time Getting a Loan
If your credit score is low, you may have a hard time getting a loan approved at all. This is because lenders see you as a higher-risk borrower. They may require a higher down payment or insist on a co-signer.
If you have problems with getting a loan, you should check out installment loans for bad credit.
3. You Will Pay More for Insurance
Your credit score can also affect the cost of your insurance. Insurers typically use credit scores to help determine premiums. Whether it is auto, homeowners, or life insurance, you will likely pay more if you have a low credit score.
4. You May Have Difficulty Renting an Apartment
Landlords often use credit scores to screen potential tenants. If your score is low, you may have difficulty renting the apartment you want. You may be required to pay a higher deposit or have a cosigner.
5. You May Have Trouble Getting a Job
For some jobs, your credit score may be checked as part of the hiring process. If your score is low, it could negatively impact your chances of getting the job. Finances are often a sensitive subject, so employers may use your credit score as a way to gauge your trustworthiness.
6. You May Be Denied a Credit Card
If you apply for a credit card and are denied, it could be because of your credit score. This can be frustrating if you are trying to build up your credit. Fortunately, there are some credit cards designed for people with bad credit.
A low credit score can have a number of negative consequences. It can lead to higher interest rates on loans, difficulty getting a loan approved, higher insurance premiums, and difficulty renting an apartment or getting a job or credit card. If you have a low credit score, there are still options available to you so don’t give up hope. Work on improving your credit score and take advantage of the resources that are available to you.