When you make a large purchase on your credit card and inching towards maxing it out, you might not realize the negative impact this activity will have on your credit score. It can have the same impact when you miss out a payment on your car loan or home mortgage payment. Mounting debt that’s not paid off in time can have a major blow in your credit score later on.
Having a low credit rating or a bad credit report can negatively affect every aspect of your life. If you’re consistently late in making payments or go over the limit of your credit card, a bad credit can make purchasing via credit quite impossible and it can also limit your lifestyle in different ways.
A bad credit score can have a lot of negative consequences than what you may think. Now, what’s the big deal on having a low credit score? These days, a lot of institutions are looking into your credit history before making a move. If you have a low credit score, you may find yourself in a position where you can’t get approved for a loan, get that job or even starting your own business. Aside from these, what are the other effects of a bad credit score?
Here are just a few of them:
You May Not Quality for a Loan
Loan applications may not get approved if you have a bad credit score. Creditors and lenders see borrowers with a low credit score as high risk, which means that they’ll be less likely to let you borrow money. Your loan applications for getting that mortgage for your dream home or for getting finance on purchasing a new car may get denied.
Higher Interest Rates and Worse Loan Terms
With a bad credit score, you’ll be subject to higher interest rates and more restrictive terms on the loan. So you found a lender that approved your loan application – it may feel a victory at first but if it comes with unfavorable interest rates and restrictive terms, it may feel like a hollow victory. The higher your interest rate on the loan, the more you’ll pay toward the interest rather than the principle in the long run of your loan period.
Higher Insurance Premiums
You’ll also be subject to higher insurance premiums. Insurance companies check background credit scores. If they find out you’ve got a less than stellar credit score, you’re most likely to be charged with higher premium, no matter how many claims you’ve actually filed.
You May Miss Out on Your Dream Job
You’ll have some challenges finding a job. A lot of jobs have a specific criteria that potential employees will need to meet and that includes a good, strong credit score. You might have a tough time landing a job that you want especially if you got tons of debt and even a history of bankruptcy.
Personal Relationships May Be Damaged
It can put a strain on your personal relationships. Your credit profile doesn’t merge until after you’re married however his or her credit standing can affect your ability to qualify for a car loan or a mortgage, when you’re applying together. Lenders look at both profiles to assess overall credit risk. These type of situations can lead to some tension and it can also threaten the relationship’s long term growth.
These are just some of the implications when you end up with a bad credit score. Start now – monitor and pull up your credit score through Cafe Credit so that you can gain control of your finances and keep you on track towards good credit.