A low credit score (also known as a bad credit score) isn’t the end of the world. Even if you have a low score, it doesn’t necessarily mean you can’t live the life you want in regards to your finances.
However, as time goes by, you’ll come to realize that a low score is impacting you in a variety of ways. Here are five issues that could come to light:
- Loan denial: Lenders look at many things when making a final decision on your loan application, with a strong focus on your credit score. If they have concerns about your ability or willingness to repay the loan, a denial could be the end result.
- Higher interest rates: Even if you do get approved for a loan, the lender will protect itself by hitting you with a higher than average interest rate. The higher rate can make it more difficult to complete your transaction, such as when buying a home or motor vehicle.
- Difficulty securing a credit card: Yes, there are credit cards for consumers with bad credit, but these don’t typically offer the same high level of features as those for people with good credit. Furthermore, and just the same as a loan, your interest rate will be higher.
- Higher car insurance premiums: Many people don’t know that car insurance companies often take their credit score into consideration when setting their premium. You already have to pay enough for coverage. You don’t want to find that your premium is higher than it has to be because of a bad credit score.
- Difficulty getting approved for an apartment: If you’re searching for an apartment, don’t be surprised if you’re asked to complete a credit application. It doesn’t always hold true, but bad credit could stop you from getting approved for a lease.
The only good thing about a low credit score is that there are steps you can take to improve it in the weeks and months to come. With the right plan in place, you’ll find your score on the rise. Subsequently, you won’t have to concern yourself with the potential pitfalls detailed above.