One of the best things that you can do to protect your financial future is to maintain good credit. Your credit score is a three-digit number that can make or break your finances. There are a number of negative consequences of bad credit.
Credit Card and Loan Applications May Not be Approved
Creditors know that they are taking a risk every time that they lend someone money. However, they know that they are taking an even bigger risk if they lend to someone who has a low credit score. That is why bad credit will make it a lot harder for you to secure a loan or credit card.
Difficulty Getting an Apartment
It is a lot easier to get approved for an apartment than a house. However, most landlords will check your credit before they approve your application. You may get denied if your credit score is low. If you get approved for a rental application with bad credit, then it is likely that you will have to get put down a higher security deposit or have a cosigner.
You may Get Denied a Job
Certain jobs may require a credit check. If you plan on working in the finance industry or upper management, then it is likely that you will have to get a credit check. Employers will also look at what is on your credit report. If you have a bankruptcy, bills that are in collections or excessive debt, then this can make it harder for you to get a job.
Higher Insurance Premiums
Most insurance companies will look at your credit. You may have to pay more for your car insurance or home insurance if you have a low credit score. Insurance companies believe that people who have low credit scores are more likely to file claims.
Security Deposit on Utilities
Many utility companies will check your credit. If you have bad credit, then you will have to make a deposit. You may have to make a deposit even if you have had utilities in your name before.
How to Improve Credit
Bad credit does not have to be a permanent thing. In fact, if you start working on your credit now, then you can improve it within a few months. The first thing that you will need to do is get a free copy of your credit report online. Verify the accuracy of all of the information on the credit report. Contact the credit bureaus if you see any errors.
Paying bills on time will also help you add points to your credit score. Reducing your debt and keeping your balances low are other ways that you can do to improve your credit score.
Bad credit can have long-lasting consequences. It will be harder for you to get a loan, insurance or a job. You will also have to pay a deposit for your utilities. Fortunately, there are ways that you can improve your credit. Paying your bills by their due dates, reducing your debt and keeping the balances on your credit card low will help you improve your credit.