Your credit score is a very important part of your overall financial health. This is a metric that is used in a variety of different ways when it comes to assessing your overall creditworthiness. When pulling a free credit score and report, you will get to see your score and understand what is causing your score to be high or low. If you have a lower credit score, focusing on ways to improve it is very important. A low credit score can impact your life in several ways.
Challenges Obtaining Loans
One of the main disadvantages of having a low credit score is that it can make it hard for you to get a loan. Purchasing a home, car, or another major item can be very expensive, and using a loan is often the best way to acquire it. When you apply for any type of loan, the lender will undoubtedly put a lot of emphasis on your credit score. If it is too low, the lender may deny your loan altogether. Even if you are approved, you may be required to put forth a larger down payment or accept a higher interest rate.
Lack of Rental Options
While it can be difficult to purchase a home without a good credit score, a low score can also impact your chances of renting a home. Anyone who decides that they would like to rent a home will have to go through an application process, which will often include pulling your credit. If you have a poor credit score, the landlord may be concerned about your ability to pay rent on time. This could lead to an application denial, or you may need to pay a larger deposit to compensate for the additional risk the property owner is taking on.
Increased Insurance Rates
Most people will need to enter into a variety of different insurance plans. Some common insurance policies that people need to have will include auto coverage, home insurance, renters insurance, and life insurance. When assessing your application, the insurance provider will receive a lot of information including your credit score. As some insurance providers have recognized a correlation between low credit scores and a higher likelihood of filing an insurance claim, they will charge higher premiums to some customers with worse credit histories.
Impact on Job Search
One unexpected impact that can come with a low credit score is that it can make it harder for you to get a good job. Almost all employers today are going to run a background check on applicants and a credit score and report is increasingly a common part of these searches. Depending on the industry and job role, the employer may want to ensure that you have a good credit score. Many management jobs, or positions that directly involve the handling of money, will avoid hiring those that have a poor credit history.
Deposits and Other Higher Costs
When moving into a new home, you are likely going to want to have utilities, Internet, cable, and other vendors set up in your home. These services will often run a credit report on the primary customer to ensure that they do not have a history or missing account payments. While it may not preclude you from getting service, the companies may require that you pay a deposit to compensate for the additional risk that they are taking on by providing you with service. These deposits can be hundreds of dollars and can be inconvenient to get back in the future.
There are clearly a lot of ways in which a low credit score can impact you and add challenges to your life. Due to this, knowing your credit score and focusing on repairing a low score is very important. By pulling your free credit report and score, you will be able to start the process of assessing your credit history and finding quick ways to improve your score.