Having a bad credit score is not a good report for anyone, it has so many consequences that can negatively affect your life. According to statistics, 16 percent of Americans have no good credit report, data from the credit reference bureau. A percentage of the same population representing nearly 28 million Americans do not have any credit scores. About 42 percent of the American people said their low scores had prevented them from obtaining financial service products. Those with common credit history may not be able to get approval for credit and loans because they are considered high-risk by lenders. You may not be able to get approved for an apartment and have to pay higher interest rates to qualify for anything. A low score is a tag no one wants to wear.
What is a Bad Credit Score?
Bad credit is an indication that a person has a history of owing too much or not paying debt on time. A low score is when a person’s credit score falls below the acceptable credit standard, meaning they have a low tendency of repaying loans on time. There are two credit scoring models, and each has a different range of scoring credit levels. Basically, under 580 on a scale of 300 to 850 is considered a low credit. A score below 670 is considered bad credit by First Isaac Corporation, FICO, and a score below 601 is considered bad by VantageScore. Any low score can hurt in so many ways.
Consequences of Having a Bad Credit Score
1. Risk to Mainstream Lenders
A good credit score gives quick access to financial products and services but a bad one can make lenders consider you as a potential risk therefore making it difficult for you to access loans, credit cards, and better interest rates. It limits your access to mainstream lenders and you will have only the sublime lenders who charge higher fees and interest rates as your last resort.
2. Higher Interest Rates And Fees
Having a good credit score doesn’t only allow you to access reputable financial institutions, you can also get the best interest rate on loans. A low score will make you pay high fees or interest even if you qualify for any loan or credit card. This can increase your overall borrowing costs and make it harder to pay all your debt. If you are planning to buy a home, you may need a higher down payment and your debt-to-income ratio may be lower. Your mortgage rates and mortgage insurance premiums may also be higher.
3. Difficulty in Renting an Apartment
It may be harder to rent an apartment if your credit score is low. Some landlords will want to check your credit score before accepting your application. The landlords or property managers may charge you higher security deposits or you will have to find a cosigner before you sign a new lease.
RentReporters can help you build and improve your credit score by reporting your on-time rent payment history to the credit bureaus. Your one-time rent payment is not automatically factored into your credit score. If rent is not reported, it could result in an incomplete credit profile and an understated credit score. RentReporters change in 15 days verifying and reporting up to two years of past payment history, averaging result in an immediate score of 40 points.
3. Higher Insurance Premium
A drop in your credit score may not automatically increase your premium and your policy may not cancel. A low score can hinder you from getting the lowest insurance premium rate. Most insurance companies use your credit score as a standard to determine your premium for auto, renter’s, and homeowner’s insurance.
4. Limited Career Opportunities
You can get better career opportunities with a good credit score but a low score will make you miss out on career opportunities. Some employers may want to check your credit report before hiring you, mostly for sensitive positions that demand a lot of financial involvement. In some states, employers are allowed to access consumer credit reports to make hiring decisions. A low score can prevent you from getting hired or promoted.
5. Higher Fees And Upfront Costs for Utilities
Utility companies are allowed to check your credit score and other background checks before providing you with public utility services such as electricity, gas, water, and non-public utilities such as internet and cable. If you have a low score, you may need to pay a deposit, or a higher monthly fee, or submit a letter of guarantee or co-signer agreement in case you fall behind in paying your bills.
How to Break Out And Secure a Loan With a Bad Credit Score
Battling with a low credit score can be frustrating and have a negative impact on your financial life. Getting a loan with a low score can even be more frustrating, definitely, you can get a loan with your bad credit. To break out of the frustration of being avoided like a plague by lenders, here are the steps you will need to get a loan even if your credit score is very low.
1. Do Credit Analysis: Without a credit analysis, you will not know how low your credit score is. A credit score analysis will help you make a decision about borrowing, to determine what you are qualified for. Clyde AI is a top pick for analyzing your credit, it offers credit score analysis, credit card comparison, and other resources that can help you make the best financial decisions.
You can get a credit card with low or no credit, 1.5% cash back, no annual fee, and up to a $10,000 credit limit. You can get over $200 for signing up for a new card and get a daily reward.
2. Compare Different Loan Options: several loan installments may look cheap but can be higher when summed up. Kredit.de can help you restructure loans according to your wishes. It helps you rearrange your liabilities and adjust your monthly repayment to be more suitable. You can keep track of your finances and increase your credit rating by replacing several existing installment loans with a single rescheduling loan.
3. Qualify for a Loan With Bad Credit: You heard it right, you can get a loan with a low score. BadCreditLoans.com can help you secure a loan, and obtain information about debt relief, credit monitoring, and other solutions to meet your needs. It’s free to signup and you will be connected with a lender in the network. And signing up requires a few simple steps. First, you need to complete an online form and see if you are connected with a lender.
Having a low score can have so many negative consequences just as mentioned above, it can prevent you from accessing almost every facility and amenities needed to keep life going smoothly. Worst of all, it can be a hindrance to getting loans or cash advances. But you don’t need to keep struggling with it, follow the steps listed above and you will be able to access loans to balance up your finances. When you are considering taking a loan also think about a better way to structure your loan to avoid paying a higher amount in total. Analyze your score and make sure you compare different loan options.