Having a bad credit score has far reaching effects beyond what most of us understand. Since credit reports are available to virtually anyone, a poor score can cripple you financially and frustrate you in many ways. Therefore, you should always ensure that you meet all your debt obligations in good time and negotiate with your financiers early in case of a crisis to avoid getting a bad rating. You should also seek to repair your bad score as early as possible as this will save you a lot.
Impact on Your Mortgage
Having a good or improved credit score reduces the mortgage interest rate and your monthly mortgage repayment by extension. On the other hand, a bad credit score will increase your interest rates. A bad report will also lower the amount of loan that the mortgage financier will be willing to give you. Some debt reports statistics show that some borrowers with bad credit reports and who are inconsistent in debt repayments end up paying up to twice the regular interest rates on their loans.
Auto Loans
Auto loans are also affected by your credit score. If you have a bad report, you reduce your ability to qualify for an auto loan. Some financiers will even ask for extra collateral before advancing you a car loan. One also get to qualify for a much lesser loan as compared to people with a good credit score. Besides this, the interest rate charged on car loans for people with a bad report is higher than for individuals with a good report.
Insurance Premiums
Both life and car insurance premiums are usually set higher for people with a bad credit report than those with a good credit score.
New Jobs
One of the more recent effects of a bad credit report is that such reports are available to your potential employers. Most employers and employment bureaus are now checking the credit rating of the potential employers before giving out a job. This means that people with a bad report reduce their chances of getting a new job.
Renting an Apartment
Apartment owners are also verifying your credit standing before letting their property to you. If you have a bad credit report, most apartment owners will not be willing to let their apartment to you. The few who will agree to let such a property will insist on a much higher deposit payment than for people with a good report.
Utilities
Most utility companies ask for a higher deposit for individuals who have a bad credit report as compared to those with a good report.
Additional Bank Fees
A bad report will attract additional bank fees and additional credit card fees. You also get charged higher credit card interest rates. A bad credit card report will also increase the interest rates of all other loan facilities including personal loans and home equity loans. The bad report also reduces the credit line of your home equity and the credit limits of your credit cards.
Ability to Get Credit Facilities
A bad credit report limits your ability to get credit facilities. It reduces your ability to get overdraft facilities and protection at your bank, reduces your ability to get new credit cards and even your ability to get installment repayment facilities from a medical office.
Alex Kibebe is a professional and talented internet writer. He writes SEO articles, website content, sales copies, e-books among other internet related content.
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