The credit score is an often underrated financial element. A three-digit number between 301 and 850, most consumers sometimes even completely forget about their score until it’s too late.
If you hope to borrow money in the future, you cannot afford to make this mistake, because your credit worthiness is used by lenders to determine how best to treat your case. Before they give you any money, the lender will look at your credit history and your current score and then make the best decision. If your credit history or credit score is poor, you could miss out big time.
The following are five common situations where a poor credit score can truly hurt you;
1. A poor credit score raises your bills
Most consumers don’t know it, but a poor credit score can significantly raise your bills – and not just when dealing with banks. Companies you buy from or do business with, including some payday lenders, cell phone providers, utility companies, and insurers all depend on the credit score. If your score is low, they might not trust you and may, therefore, charge you more, fearing that you might default midway through the repayment period.
2. It could keep you unemployed
You might not have seen this one coming, but, yes, a poor credit score could be the reason you’ve been jobless this long. With competition at an all-time high, most employers are raising the bar and now only hire responsible employees. So, before hiring you, the employer will run a credit check to see if you always pay your bills – on time. If your credit score is poor, they will get the impression that you’re irresponsible and may choose not to hire you.
3. It determines whether your loan is approved
Your credit worthiness also determines whether or not your loan gets approved. And not just that; it also determines how much interest you’ll pay on the loan. This can be a big blow especially if you run a business and therefore need loans to fill in the gaps from time to time. Some lenders will turn you down outright, while the ones that agree to deal with you could charge you exorbitant rates.
4. It could keep you from getting the home you want
This applies both when you’re buying and renting. When purchasing, a low credit score may prevent you from getting a loan thus making it impossible to buy the house of your dreams. The same applies when you’re renting. After the rent-to-income ratio, credit score is the next thing landlords look at when renting. A low score can convince a landlord not to rent to you.
5. Bad credit can influence your relationships
Finally, and most interestingly, a poor credit score can be the reason you miss out on marrying the person of your dreams. In a recent Bank Rate survey, four in ten adults said they need to know the other person’s credit score before committing to a relationship. If your score is poor, count yourself out.
There you go! If you thought a credit score was just some random number, think again. The good news is that you can begin rebuilding your credit worthiness right away.