Negative effects of a low credit score


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Negative effects of a low credit score

  1. 1. Negative effects of a low credit scoreAre you one of those people who think that having a low credit score will have no effect ontheir lives? Well, think again. Having a low credit score can truly affect future transactions,businesses or even your job. Here are a few examples of how a poor credit score can affectyour life. 1. High interest rates- When you have a very poor score, lenders and banks will be hesitant to approve your loan. They will see you as a risk because they think that you’ll be having trouble paying them back or you won’t pay them back in time. When you have a good score, the interest will usually fall 3% or below, with a low score it will twice as that. 2. Difficulty with credit and loan applications- As stated above, lenders and banks will see you as a risk. With a low credit score, denied applications are not uncommon. You’ll either be denied or, you’ll get the loan but with a very high interest. This is not a good disposition because if you do go for it, you’ll be paying more on the interest rather than saving the money for something else. 3. Employment difficulties- Yes, that’s right! Companies often do a background check on their employees, especially for high job positions. They will check it for debts or outstanding bills and these may affect your application. 4. Security deposits- Utility companies will check your credit history as well. If you have a lot of bad marks on your record, they will surely ask you for a deposit even if you have paid your bills regularly. 5. Difficulties in starting a business- Most entrepreneurs need a loan in order to start their businesses. A poor score can limit the amount you can borrow no matter how promising your idea seems.These are just a few of what a low credit score can do to your plans. But if these still did notcatch your attention, then you better research more about the benefits of a good creditscore. Maybe then you’ll think about improving your credit.If you are thinking about improving it already, then be sure to check out your credit reportregularly. Make sure to clear off errors and as soon as your bill arrives, pay for itimmediately. That’ll help you boost your score and prevent negative marks from ruining yourhistory.