How Will A Bad Credit Score Affect You?

Having a bad credit score means that you have issues managing your finances, especially your debts. Although there are many factors that affect your credit score, Credit Repair Australia  debt is the biggest element that can make or break it.

Having a bad credit score will negatively affect you in many ways and has its fair share of implications in multiple areas of your life.

Difficulty In Acquiring A Loan

You will probably need to acquire a loan at least once in your lifetime. There will be times that you will be forced to acquire a loan, especially during emergencies. However, having a bad credit score will hinder you from getting the help you need.

All financial institutions that offer a loan to their consumer require their borrower to have a good credit score. It doesn’t matter what type of loan you are acquiring. Whether it is a personal loan, a home loan, or a car loan, financial institutions often require you to have at least 610 to 640. Lower than that will result in a rejection.

A bad credit score is an indication that you are having financial trouble and that the possibility of you not being able to fulfill your duties is high. This is a risk that not all lenders want to take. However, there are still options for you if you have a bad credit rating. You can opt for a Bad Credit Car Finance loan that is offered by online lenders.

This loan option gives bad credit individuals a chance to acquire a loan despite their low credit score. But the catch? This type of loan has a higher interest rate than personal loans offered to good credit consumers.

Lenders impose a higher interest rate on a bad credit loan to compensate for the risk they are taking. And if you need money, you will grab this opportunity even if it means paying double. In addition to a higher interest rate, you will also face more restrictive loan terms.

Trouble Getting a Job

Although there are no significant links between an employee’s performance and their credit score, some employees have reported getting rejected from a job due to poor credit scores. Employers have the right to conduct a credit check on their applicant’s credit records during the hiring process. This is called an employer’s credit check. This kind of credit check is only a soft inquiry or also known as soft pull which will not reflect on your credit record. But keep in mind that employers need to inform you that they will dig your credit records.

Employers consider an employee’s credit score an indicator of financial problems that can greatly affect your performance at the job you are applying for, especially if you are trying to apply for a job related to finance. It would be understandable why employers will be cautious in hiring an applicant for the position.

High Insurance Premium

If you think having a bad credit score buries you deeper, well, it does. Aside from having a higher interest rate in your loans plus a poor chance of acquiring a job, your insurance premiums will add another insult to your injury.

Because of credit-based insurance scoring, individuals who have a bad credit score will increase their insurance rate. Auto and home insurance companies are looking at your money habits when assessing the risk you impose, which is why a lower credit score will automatically correspond to a high insurance rate.

Difficulty Acquiring Phone Contract

Having a cellular phone has become a necessity nowadays. A phone is your connection to your family, friends, and work. Applying for a phone might be straightforward. You will have to fill-out a form and provide the requirements needed by the phone carriers. Easy isn’t it? But did you know that one of the requirements of these telecom companies is your credit record?

Your credit score will tell the telecom companies about your ability to pay your monthly bills on time every month. Having a bad credit score will only mean that you are less likely to pay on time due to insufficient money or multiple debts that you are already paying. Adding a telephone bill on top of it can be risky for telecom companies.

However, telecom companies offer alternative options for people with bad credit. The first option you can take is to provide security deposits, just like in a secured credit card. If you pay your bills on-time every time for two years, you will get your deposit back.

The second option you can consider is a prepaid phone instead. It may not have service as good as postpaid phones, but it can suffice. With the credit score you currently have, a prepaid phone may be your best option.

Improve Your Credit Score

It is really important to take care of your credit score as it can affect major factors in your life. Improving your credit score might be a long and difficult process, but it is attainable. If you are already suffering from a bad credit rating, then it is high time to start improving your score.