48 million Americans have a bad credit score, according to Experian. Being part of this group means having a financial life that is not easy and full of limitations.
In this article, you’ll understand the impacts of having a credit score below 579 and why it’s so important to keep your credit score healthy. Check it out below!
Here are eight difficulties faced by those who have a not-so-good credit score. Finally, find out what the first step can be to reverse this situation:
Unfortunately, the vast majority of banks and lenders will decline your loan application as soon as they notice your credit score is bad. The same goes for credit cards, mortgages, student loans, car loans, and all other credit services. Still, you can find some loan opportunities.
There are even lenders who specialize in offering credit services to people with bad credit scores. However, the number of available options is extremely limited. In addition, you will have to deal with many restrictions and unattractive offers. Learn more in the following topics:
As we said before, most credit cards in this country offer higher rates and lower credit limits. However, these are not the only disadvantages faced by people with not-so-good credit.
Most cards available to this audience do not offer any rewards programs. In addition, it is difficult to find cards with really advantageous benefits. So forget about miles, cashback, or discounts on purchases for now. Also, lower-rated personal cards do not offer welcome bonuses or 0% APR periods. Typically, these types of deals are only available to people with good or excellent credit.
A bad credit score is read by banks as a warning of danger. A score below 579 means you are not very responsible with payments and credit use. Therefore, the bank may even agree to offer loans, cards, and other credit services. However, to compensate for the risk, these banks have raised the interest rates on the services they offer to earn more.
Therefore, people with not-so-good credit will have access to cards with higher APR and loans with interest rates well above the market average. Furthermore, you may also face limitations on the amount you can request. Furthermore, the credit cards offered do not usually have a high credit limit or require a secured deposit.
Incredible as it may seem, bad credit can even influence the opportunities you can find in your professional career. In most states, a company will be able to look at your credit history. However, this is only possible if you provide written authorization. Thus, a company can take this information into account when hiring a new employee.
The same can happen in the case of promotions or internal job changes. This aspect is mainly taken into account for vacancies that require financial responsibility. Positions in accounting agencies, banks, and creditors are some of the companies that can use this resource.
Most people who decide to open a business need a loan to structure their own company. However, when you have affected credit, it is difficult to convince a bank that it is a good idea to offer a loan.
After all, the bank understands that you are not exactly good at managing financial resources. Some investors may also be wary of investing in your business.
A good number of real estate agencies routinely check your credit score before signing the lease. According to Experian research, people with credit less than 620 may struggle to get an apartment.
If your score is bad, the difficulties tend to increase even more. Some owners just don’t want to do business with you. In many cases, you will only be able to rent an apartment if you can pay secured deposits or take advance payments.
Distributors of basic services like water, gas, and electricity also check your credit history before offering services. In fact, there are laws that understand that these services are basic to human life. Therefore, companies cannot simply decide not to offer them to you. However, these may require you to make deposits or appoint a guarantor. A guarantor is someone who will assume the legal responsibilities of the accounts with you. Thus, if you are unable to stop, your guarantor will be asked to pay the amount owed.
Unfortunately, internet and phone services do not receive the same legal coverage. Therefore, people with bad credit may be deprived of access to these services.
Today, more than half of higher education students rely on student loans to pay for their studies. However, as you may have already understood, loans are more difficult to obtain with bad credit. As loan amounts are high, no private bank would trust to do this type of deal with someone with bad credit. So, the way out is to find a guarantor with a high monthly income and a high credit score.
However, not everyone can count on this feature. Another alternative is to take out federal loans. However, there are many students who regret resorting to this resource because they are unable to pay the loan after finishing college.
If you have bad credit or feel your credit could drop dramatically, don’t despair. There are countless examples of people who have been in conditions similar to yours but managed to reverse this situation.
In fact, you just need good planning and the right tools that can help you. One tip is to rely on credit cards designed for people with limited credit. These have low restrictions on accepting new customers.
Also, they will help you rebuild your credit. Therefore, ordering one of these cards can be a good first step.
Alexia is the author at Research Snipers covering all technology news including Google, Apple, Android, Xiaomi, Huawei, Samsung News, and More.
