A lot of people feel that society looks down on them because of having a poor credit score. Well, it is true. It may be unfair as there are numerous reasons why somebody ended up having a poor credit score.
For instance, loss of a job or medical bills may put somebody in a tough situation. But, the reality is that credit problems do not go away easily and easy to acquire. Typically, they stay on your credit report for a long period of time.
What Poor Credit Score Means?
If your credit score is poor, you have to take action to build up credits if you like to qualify for credit cards, car loans or mortgage. If you don’t have credits, you might like to begin with a secured credit card. Secured cards will require making monetary deposits as security for the card. Lenders will establish your card limit that is based on the money you have on deposit.
If you do not make the required payments on the card, the lender will use your deposit for covering missed payments. Lenders aren’t taking a risk and having secured card may provide somebody with poor credit history the opportunity to have some positive results. Once you have proven yourself, you may apply for unsecured credit cards.
If you have poor credit score, it is essential to take a look at your credit report to ensure that it is accurate. If it is not, begin the process of disputing items that do not belong to you or incorrect. Never forget that you may get your credit report once every year. It is something you must take advantage to ensure that your credit report has updated and accurate information.
Poor Credit Score – How Can It Affect You?
Having poor credit score may affect you in various ways and these include the following:
- Difficulty Getting a Small Business Loan
If you have a small business and you need loan, having poor credit score might make it impossible or difficult for you to get one.
- Risk of Being Rejected for a Job
While employers cannot access your credit score, they may ask for your credit report and with negative information, you could be at risk to be rejected for a job. That is the case for the positions that have some financial responsibilities.
- Difficulty Getting Approved for a Cellphone or an Apartment Contract
It comes back to the risk. Some providers do not like to lose money through taking on risky customers.
- Risk of Being Denied Credits
The lenders reject your loan application once you have a record of managing your credit poorly.
- Trouble Getting a Mortgage
A mortgage is a huge loan. Lenders like to be confident that you won’t default on them. While others will charge high interest rates, some might reject your application.
- High Interest Rates
Since lenders see people with poor credit as a high risk, they will charge high interest rates. Having a bad credit score can result to high interest rate on home mortgage that may cost you thousands of dollars.
Poor credit score does not define who you are. You don’t have to be ashamed about it as there are ways on how you can improve it.