Youve probably heard that bad credit can ruin your life, and this is totally true. Having credit that is less than stellar is a great way to set yourself up for financial failure in the future. Bad credit can cost you money, and it can even cost you a job. If you havent thought about changing your credit score, here are three ways that less than great credit can hurt you. All of these are reasons to pay attention to your score so that you can have a better financial life.
First, bad credit costs you money on a daily basis. Many people think that poor credit only costs you when youre getting ready to take out a loan. The truth, though, is that it can keep you from getting the best rates on any loan you take out. This has immediate and long-term ramifications. Immediately, it causes your monthly payments to rise. In the long term, it causes you to pay a whole lot more money in interest to various lenders.
Just think about this with your home. There is a huge difference between 3% and 5% interest on a home loan when youre talking about a $150,000 loan! Over the life of a loan, you could be talking about tens of thousands of dollars of interest payments because your credit score wasnt good enough to get the lower interest rate.
Bad credit can also cost you a job. Credit scores are basically risk assessments done by professionals. The more responsible you are, the less risky you are, and the higher your score. When you have a low score, it means you are probably reckless with your money and are prone to paying bills late. This could mean that youll be irresponsible in a job, and it could cause potential employers to reject your application.
Finally, a bad credit score can keep you from getting a contract for an apartment or home lease or even a cell phone. When you dont pay your bills on time for the most part, no one is going to trust you to start doing that right now. If you go to apply for an apartment, your potential landlord will most likely check your score. If its too low, you might be denied, and this could happen with other things including phone contracts and even Internet contracts.