If you are not careful, and choose to do nothing to improve your credit score, you will be paying too much for everyday services or get denied for financing needed to improve your quality of life.
Here are the top 10 ways your credit is affecting you:
The loan application process entails an in-depth review of the borrower’s credit history and scores. Those with a credit score of above 620 are typically able to benefit from getting above average interest rates. It’s a well- known fact that those with top tier (720 or above) credit ratings will benefit from the best interest rates the market has to offer.
On the other hand, if your credit score is below the qualifying score, you are more likely to receive higher interest rates (4.5% to 6%) or simply be denied approval for your home loan. If you get approved with a low credit score, you will pay a higher monthly payment to own your home. Due to your low credit scores you could potentially pay double or possibly triple the actual value of your home.
More times than not, you will rent your home or apartment against your desires because of bad credit. It has become a standard practice amongst consumers to rent, not necessarily because they want to, but because they are forced to do so based on their poor credit rating.
While renting, your monthly payment goes to your landlord which will assist him/her with paying their mortgage. You will never get this money back.
Can you image the amount of money wasted over the years on renting as a result of bad credit? When you own your own home, the monthly payment will go towards gaining equity, which you can eventually turn into cash or even become mortgage free.
In some cases, renting is the best option. If it isn’t time to settle down, your job requires you to move often, if you are in college, etc. Having bad credit could be very costly in these situations. Consumers with less than perfect credit typically end up paying a higher deposit compared to someone with a better credit rating, if approved at all. If not approved, you will need a cosigner to obtain approval for an apartment or rental home. Either way, your bad credit record easily makes you a credit risk, hence the higher deposit you have to pay.
There are three outcomes if you have bad credit and are attempting to obtain financing for a new vehicle.
Typically, individuals with a good to excellent credit score rating, can obtain a rate of 2%-6%. Which can be the differences of hundreds of dollars a month.
Believe it or not, a poor credit score also has an impact on your car insurance premiums. Often insurers use credit scores as a way to predict the possibility of you filing a claim. Depending on your state, your bad credit score could be, in part, to blame for your higher insurance premiums.
According to Consumer Reports;
“Average difference paid by drivers with “good” score vs. those with the best score – $214”
The same goes with homeowner’s insurance; the lower your credit score, the higher your insurance rate.
Similar to the loan application processes, utility companies will typically review the applicant’s credit history. In this instance, if your credit is poor, the company will generally require you to provide a high security deposit to start receiving the service. There are also cases when a company will choose to deny the consumer service due to the potential financial risk. Those with a good credit rating often obtain low or $0 down deposits for their utilities.
Most don’t realize that in some cases your ability to get a job is affected if you have bad credit. Those in the finance industry, upper management and looking into positions that require security clearance are the ones most likely to experience such setbacks due to a poor credit history. If you have a poor credit rating, companies deem this as an indicator of your job performance and attendance. Your credit can even keep you from being considered for a promotion at your current job.
Conducting a credit history review is also part of the application process for getting internet and cable service. This aids companies when determining an applicant’s deposit for equipment and service. Applicants with a low credit score will be charged a higher deposit than the standard, require a cosigner or obtain overall higher rates for the service.
Unfortunately, instead of addressing their credit issues, some consumers will resort to asking friends and family to obtain services for them in order to avoid large deposits.
Having bad credit affects the way you make decisions on goods, services, and living situations.
For example, if you are looking to get a new car and you have a below average credit rating, you will find yourself having to settle for a higher interest rate on a car that is not even your preferred vehicle.
Overtime, this way of thinking will condition you into always settling for less than what you are deserve.
This day and age, people are looking for more than bonding and common interest when looking for their long term partner. More and more men and women are starting to look at their potential partner’s credit status as a deciding factor for longevity of the relationship.
This seems to be a pretty good indicator whether or not a partner is going be financial stable moving forward. This makes sense considering finances are the number one cause of divorce today.
Overall, bad credit can truly have a negative impact on one’s life if it is not resolved immediately. Credit is not a subject that is taught in school, so we recommend that you start by educating yourself on credit and its proper utilization. If you find yourself with negative information on your credit report and have the desire to resolving these issues, but don’t know where to start, start with a free credit analysis and consultation with White, Jacobs & Associates today.