- April 27, 2023
- Mark Elwes
5 Consequences of Having a Low Credit Score
Did you know that it is difficult to even get some kinds of jobs with a bad credit score? That’s the reality. Experts are constantly suggesting credit card holders become ‘aware’ of their credit scores. Maybe that’s the first step to solving bad credit issues.
However, the existence of a bad credit score can get painful for you. Your creditworthiness takes a downslide. Your expenses ascend. A host of penalties found you unexpectedly. There are more to these issues. Let’s know what bad credit is first. We may then learn its consequences and hopefully its solutions.
Defining a Bad Credit Score
When you own a credit card, you get a number with it called the credit score. Your credit issuer also monitors this score. It indicates how you manage your credit card expenses. The expenses may include paying with it to buy things. Credit card fees and annual rates also join as factors defining the credit score.
As you can see that all of these are kinds of payments by credit card. If you make them sufficiently and timely, then your credit score stays the same. It may also improve. With such improvement, you get financial perks. However, paying your credit card bills late or insufficiently decreases your credit score. It goes downhill. As a consequence, you have to pay charges as a penalty. And, of course, other financial limitations might find you.
In the UK, Experian standards of credit scores are followed. According to this standard, a score between 720 and 561 is considered bad. A score between 560 to 0 is looked upon as a very bad or extremely poor credit score.
Consequences of a Poor Credit Score
A poor credit score is not frustrating. But it may drain money significantly. Once it exists, it is not going to do any good to your personal finances. Here are some problems you might expect with a bad credit score:
- You Might Not Get to Borrow Money Easily
People borrow money because they need cash fast. However, a bad credit score can act as an impediment to borrowing. In the UK, every 1 in 10 people having a bad credit score has difficulties getting a mortgage.
What is the major problem with a poor credit score? It defines your personal finances as insufficient or weak. So, your lenders may not trust you easily. They can ask for a hard credit check. It includes updating your credit score and lengthy credit analysis. It might not help you get money fast.
- Even If You Borrow Money, You Might Face Strict Conditions
This is one of the undeniable issues of a bad credit score. You can browse lenders. You might have interacted with this lender and then that. However, in all cases, you might have to pay high-interest rates.
Mortgages can appear a little troublesome for a poor credit score. You may not get issues with the down payment. But the interest rate may increase. People go for mortgages because of the super-low rates. A poor credit score might not let you get that perk.
- You May Not Get Easy Renting Options
If you want to rent a room for study and work; you’d again need it fast. Both studies and work are timely agendas. A bad credit score can again get in the way.
Landlords might check your credit score. If it is found low; then you may be denied a rental opportunity. This factor eventually stunts your options. You might have a hard time finding a room for rent.
- You Will Have to Bear Extra Insurance Costs
Life insurance policies are not that hard on you with the credit score.
But other sorts of insurance policies such as auto insurance will check the score.
You may ask the reason for that. Well, research shows people with bad credit can be likely to go bankrupt. While it is not a direct outcome, it is a possibility. This is what both insurers and lenders do not prefer.
- You Will Miss out on Credit Card Rewards
Credit cards do offer financial rewards. Of course, if you use them correctly, then you will be gifted. From discount rates to even insurance; a credit card offers rewards in a redeemable fashion. You can also get cashback money by using cashback credit cards.
But you know that these goodies won’t exist with a bad credit score. You would rather have to spend money on penalty charges for a poor score. As mentioned earlier, it doesn’t allow you to save money.
Are There Solutions to Bad Credit Score Issues?
If you search for them, then there are. We are a direct lender in the UK. We deal with countless bad credit borrowers on a daily basis. Here is what we recommend:
- You are still eligible for emergency personal loans. You can get a quick loan with no guarantor in a bad credit score. Take this loan out to pay all pending credit card bills. Then pay back the loan timely. Your credit score will improve. Plus, your payments will also be taken care of.
- Find a private lender for these loans. These organisations like ours prioritise loan products only. You can get additional offers and facilities for them for a bad credit loan.
- Try to understand your credit limit. Do not spend more money than that set limit. The credit limit has a time duration and then it renews. Speak to your credit card issuer to learn more about this.
- If you are suffering from extremely bad credit, then take out an alternative loan. You can take out doorstep loans with no credit checks. Direct lenders like us can send these loans to you faster. It is because we omit the credit check part to help you with cash money quickly.
The poor credit problem might be an issue. But know that it is a common problem. With the right knowledge and assistance, you can solve them. Don’t panic and manage your credit score smartly.
Mark Elwes is the Editor-in-Chief at Extramilefinance. He is a notable member of the content strategy team since his joining in 2017. Driven by his fondness for the finance industry, he has spent years gathering as much knowledge as possible about various financial products that include loans also. Previously, Mark worked as a senior journalist writer with experience in writing blogs and articles.