Bad credit affects more than just your ability to get a credit card. In fact, a bad credit score can haunt you in many different areas of your life. If your credit score isn’t what you’d like it to be, then it’s important to know about the potential ramifications that if can have. Here is a list of the top 10 ways that bad credit could hurt you:
#1. Difficulty finding access to emergency funds
Life is full of ups and down, and it’s not always easy or even possible to be prepared for every curveball that is thrown your way. Many people find themselves in situations every day where they need access to emergency funds as quickly as possible, but when you have bad credit, it can often make it difficult to access the money you need because you’ll have a harder time getting approved for loans and credit cards. And when you are able to secure a loan or card from a lender, you’ll likely have to pay much higher interest rates than if you had good credit.
#2. Higher insurance costs
Although it is illegal in some states, some auto insurance companies draw a connection between your perceived ability to pay on time and a propensity to drive recklessly, which often leads to rate increases and, in some cases, even denials. Bad credit could also lead to higher property insurance rates, because of the claim by insurance companies that there is a correlation between high insurance claims and low credit scores, although again, some states prohibit insurance companies from raising rates due to credit scores. However, in some places, like West Virginia for example, a bad credit score can leave you with a property insurance rate that is over 200 percent more.
#3. Difficulty finding or keeping jobs
Under the Fair Credit Reporting Act, which was enacted on October 26, 1970, employers can check applicants’ credit scores as a part of the hiring process. This seems particularly unfair, considering the fact that a study that was published in 2012 in the Psychologist-Manager Journal found that the correlation between credit scores and job performance is minuscule to nonexistent, but that doesn’t stop employers from checking it.
#4. Lack of mobility
Whether you’re trying to move to a different state or city, or you are just trying to take a trip to visit friends or family, bad credit can make it increasing difficult to be mobile. Travel credit cards and other benefit programs available to those with good credit scores allow individuals to save hundreds of dollars on travel expenses, but those with bad credit are often stuck paying full price. A bad credit score can also affect your ability to secure financing for a vehicle, or as we mentioned above, it can also make it difficult to find affordable car insurance, which can further limit your mobility.
#5. Difficulty renting
Whether you’re trying to refinance your mortgage to help you free up a little extra cash every month or you are looking to secure a new mortgage so you can buy a home, a bad credit score can make it an almost impossibility. However, renting with bad credit often isn’t any easier. Landlords use your credit score to determine if they can rely on you to pay rent on time and in full, and if your credit score is bad, it can be difficult to find a landlord who will give you a chance.
As you can see, a bad credit score can affect your life in many ways, but at Ways 2 Rent, we can connect you with bad credit apartments and other programs that make renting with bad credit easier. Contact us today to learn more about renting with bad credit, and stay tuned for our next blog to learn about the other five ways that bad credit can affect your life.