There are those who think bad credit isn’t a huge deal; they don’t feel the need to worry about putting in the necessary work to build their credit back, until they want to make a big purchase that requires a strong credit score, like a car or a house.
But it’s not always just the big purchases that can be affected by a bad credit score. The fact is that poor credit follows you, takes time to repair, and impacts you much more than you may think. Here are some of the ways that a low credit score can affect your everyday life.
Credit and Loan Applications
The most obvious place that low credit scores impact your life is when applying for a credit card or a loan. Lenders know that there’s always some risk in approving a loan, but your credit history bears most of the weight in their decision-making process. It’s the only proof they have that you can pay them back and adhere to the terms of the contract. If your credit is bad, they’ll likely determine you to be too risky to lend to, and will deny your loan.
Home is Where the Approvals Are
When you’re looking to rent an apartment or home, a credit check is almost always part of the approval process. Landlords want to make sure that they find tenants who can pay their rent on time. If the landlord runs your credit and sees that your score is low, they may deny your application or charge you a high security deposit to protect themselves from the risk.
Extra Charges for Utilities
A low credit score is worrisome to just about anyone entering a contract with you—including utility companies. When the gas, water, or electric company feels your credit score indicates that you may be unable to pay for your service each month, they could require you to pay cash upfront or pay a high security deposit before providing you with service.
Denied Cell Phone Contracts
Similar to utility companies, cell phone companies run a risk by providing you with a month of their service before receiving payment for it. As a result, most cell phone companies run a credit check before activating your service. Should they discover your low credit score, they may deny you service, as it indicates potential inability to pay your bill.
Higher Insurance Rates
If you’re in the market for car insurance, a bad credit score could increase your monthly premiums. In all but three states in America—California, Hawaii and Massachusetts1 —auto insurance can be higher for those with weak credit because their data has found correlation between low credit scores and higher insurance claims. Be sure to shop around for different insurance plans because insurers treat credit, and credit scores, differently.
Have Bad Credit, Need Money Right Away
Don’t let bad credit prevent you from making key decisions about your life. Need cash quickly? An installment loan may be the solution! Simply apply, receive a decision, and if approved, have the money deposited in your bank account the same day.*
In the meantime, check out Allay, which is a tool we created to help you get back on track with your finances, improve your financial standing and rebuild your credit. Visit our Resource Center to learn more about improving your credit, including using installment loans for bad credit, how to apply for an installment loan, and the differences between payday loans and installment loans.