For the 35% of Americans with debts currently in collections, and for the millions who have to face low ratings listed on their credit reports, having bad credit can mean a lot of grief. While most people expect high interest rates, and often the inability to get a loan at all if they have a low credit score, they may not realize the other ways in which they could encounter difficulties. We've compiled 4 of the most frequent scenarios in which a low credit rating can really make things complicated.
1. Insurance Premiums
When you’re looking to get car insurance, companies aren't just looking at your driving history –they’re also investigating your credit rating to see how you are with past payments. For both car and homeowners insurance, your premiums are likely to be higher when you have a lower score.
2. Renting a Home or Apartment
Before letting you sign a lease, landlords and property managers are allowed to check your credit history to maintain that you’ll be a good tenant. Unfortunately, not only could you have a higher rent/deposit, you could also be denied the contract altogether if they feel you could be a liability.
3. Setting Up Utilities
Another home-based chore that can become a huge hassle, if you’re found to be a credit risk, the utilities companies may require down-payments or increased rates to guarantee you won’t end up behind.
4. Getting a New Job or Promotion
While employers can’t see your actual score, they are able to request an employment credit report, which lists your credit history. If yours isn’t sterling, you could be turned down for a job or a raise. And if you think it’s probably not that common to check, you’d be mistaken – a 2012 study from the Society for Human Resources Management found that nearly half of U.S. employers use credit checks on some or all of their job applicants.
Taking control of your credit score means making payments on time, maintaining low credit utilization and having a diverse type of credit – while having your overall debt under control. If you’re in need of finding the next step, stop by any FCU branch for a free credit analysis.
Like this article? Read this other FCU Blog Article: “4 Tips to Improving Your Credit Score“