A lot of things, including late payments on your credit card bills or the amount of debt you have, can impact your credit score. If you make a financial mistake, your credit score can fall and when it does, the consequences will be dire. Lots of different businesses will judge you on your credit score, which means having a bad credit score can make your life very difficult.

It Can Make You Pay Higher Interest on Your Credit Cards and Loans

Lenders interpret a low credit card to mean you are a risky borrower and that you are likely to default on a loan. It does not matter if that loan is a credit card or a traditional loan. Lenders make up for this risk by increasing the interest rates you pay on the loan obligations you have.

When you get a loan with a bad credit score, know that you will pay a lot more for the loan in the long term than you would have paid if you had a better credit score.

You Will Have a Hard Time Getting a Loan Approved

Because people with lower credit scores are seen as riskier borrowers than people with high credit scores, lenders might not approve their loans. If you find your loan applications being denied regularly, try to find out if this is happening because of your credit score and take steps to repair your credit and raise your credit score.

Difficulty Getting a Mortgage

A bad credit score is a huge hindrance to getting a mortgage. Remember, a mortgage is essentially a loan with which you use to purchase a home and repay the amount like you would any other loan. If you have a bad credit score, lenders might think you will default on the mortgage payments and therefore be less likely to offer you a mortgage. If they do, you can expect very high interest rates.

To make your situation a lot better, it would be better to stick to one loan and make regular repayments. One loan is easier to manage, and making regular repayments gives banks and other institutions an assurance that you will pay the mortgage if they extend it to you. To get a manageable loan which will be easy to make regular payments on, check out New Horizons. They will introduce you to a panel of lenders who will give you a loan on favourable terms. The lenders on New Horizon’s panel of market-leading lenders offer different types of loans, including loans for bad credit scores. These lenders will give you an instant decision on your loan application and credit your account in as little as 15 minutes if approved.

Security Deposits Everywhere

Many utility companies, including phone and electricity suppliers, check your credit score during the application process. If you have a bad credit history or a low credit score, they might ask you to pay a security deposit. Many companies will give you some leeway if you usually pay your bills on time, while others will request that you pay the deposit without considering your past.

Difficulty Finding an Apartment

Much like traditional lenders, landlords want an assurance that you can pay your rent on time. To find out if you can, they will do a credit check on you. If you have a low credit score, you might have a hard time getting accepted.

One thing to note though, is that landlords cannot see any rental defaults or late payments unless they are part of the public record because of being exposed in a court case. Because of this, landlords can see your credit score but cannot gauge your ability to pay rent based on your past apart from using your credit score.

Higher Insurance Premiums

Insurance can determine how much of a risk you are by looking at your credit score. They then use a formula to determine how much your premiums will be. It is common to be rejected for monthly payments or to be rejected outright by an insurance provider due to your credit score. If you find an insurance company willing to take you on as a customer, you might have to pay annually or pay higher insurance premiums. Just remember that your credit score is not the only factor that affects your premiums as many other factors can come into play.

Difficulty Starting a Business

Many entrepreneurs who do not have enough funds to fund a new business venture will often consider getting a loan from different lenders to plug the deficit. A bad credit score will cripple this process majorly, as lenders will see you as too much of a risk.

Some things you can do to get the loan you need include getting a co-signer for the loan or getting a secured business loan where you offer collateral as security for the loan.

Difficulty Purchasing a Car

Purchasing a car with bad credit can be a frustrating experience. For one thing, banks will be reluctant to give you a car loan as they will check your credit before giving you the loan. And second, if you get the loan, the interest rates might be so high that getting the loan will not be worth it.

Difficulty Getting a Job or Promotion

Although your employer or hiring company might not come out and say it, your credit score plays a role in getting you a job or a promotion. This is especially true for high-level management roles or roles that involve dealing with money. For these positions, companies want to know they are handing the keys to someone who is financially responsible.

You Have a Hard Time Building Wealth or Retiring

One unseen disadvantage of a low credit score that many people don’t think about is that higher interest rates on things like credit cards and loans you borrow make it harder to save for the future. This means most of your money will be going to servicing debts and very little of it will go into your savings.

Having less cash on hand means you cannot explore investment opportunities and opportunities to build wealth. It also means that you might have to work some extra years as you will probably not be able to retire when you would like.

You Will Miss Out on Credit Card Perks

Credit card companies only give their best rewards to people who have high credit scores. These include lower interest rates, introductory offers, and cash-back programs. Some credit companies also give perks like exclusive access to certain concerts and shows, pre-sales, promotions and cash-back on streaming services to customers with good credit ratings. It might not be much, but these perks can make your life a little better.

A bad credit score coupled with a poor credit history has consequences most of us do not think about. The worst part is that the effects of both things touch areas of our lives we do not even know they are touching. A bad credit score and poor credit history can make it hard to find housing or even to get certain services. If you have not had a look at your credit score and credit report lately, now would be a good time to see if they are affecting you negatively so that you can take corrective measures if so.