HOW BAD CREDIT CAN HURT YOU
Posted on: Feb. 25, 2017 in Car Loans, Credit Score, Credit, Auto Insurance

Do you have bad credit? You’re not alone. Millions of Americans have low credit scores. Experian, one of the three main credit bureaus, estimates as many as 1 in 5 people have bad credit. Some will tell you that having a bad credit score isn’t really a big deal and that it’s just some arbitrary number that doesn’t mean much. Because so many face dealing with low scores, you may be inclined to think that there’s no real impact. But having a low credit score can negatively affect your life.

The most obvious way that a bad credit score can hurt you is the way it influences your ability to get more credit. Loans and credit card lenders rely on these scores to determine whether or not to extend you credit or a loan. But beyond that, they look at scores to determine the terms of the loan. What does that mean? Well, factors like how much money you can borrow and the interest rate are two particularly important things. If you need $10,000 but can only borrow $5,000, that’s a problem. Also, if you can borrow what you need but the interest rate is 10% but someone with good credit can get the same amount at 3%, you will pay significantly more to borrow.

Your credit score can also be used in other circumstances that you may not have considered:

  • Auto insurers in most states can pull your credit report to determine your auto insurance rate. While it may seem unfair or unrelated, insurers argue that people with bad credit are more likely to file a claim than someone with good credit. Someone who is having financial trouble is less likely to have money on hand to fix minor damage, therefore, they’ll file a claim and ask the insurer to cover it. Meanwhile, someone with more money might forego the insurance claim and deal with a fender-bender themselves.
  • Landlords will often check a potential tenant’s credit before renting an apartment or home to them. Why? They want to know they’ll get paid. A credit history marred by late payments can be a turnoff for property owners. While it’s not impossible to rent a place to live with bad credit, you may not have access to the best accommodations.
  • When you’re looking for a job, you hope your experience and qualifications will speak for themselves. And they just might, but your credit score might have something to say about you, too. Some employers will request to pull your credit history before offering you a job. If they don’t like what they see, they may opt not to hire you. If the position you’re applying for requires dealing with money, this is even more likely to be true, but even a job with not ties to finances could be withheld.

If your credit score is low due to a bad credit history, there are steps you can take to fix it. Finding out what went wrong (if you don’t already know) is always your first step. Be sure to read more posts on this blog for tips for raising your score.

If you’re ready for a new car but your credit is keeping you from getting approved, CreditYes can help with our bad credit auto loan program! We can match you with a dealership in your area that will be with you ever step of the way. Our service is fast and free. Fill out our secure online application and get behind the wheel of your next car today!



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