Contributed article in our career series. Enjoy! – Scrappy Kimberly
When was the last time you checked your credit status? If it’s been more than six months to a year, you may want to make this a priority. Though it may not seem like a big deal at the moment, as companies begin to become increasingly dependent upon credit to determine eligibility for products and services, a poor credit history could mean the inability to get even some of the most basic things.
Don’t believe it? Here’s how a negative credit rating can impact your life.
Reduces Your Options When in a Bind
Emergencies happen all the time. A car repair, leaky pipes, or even a loss of income can set the average household budget back several hundred or several thousand dollars. If you don’t have the money in the bank to cover the emergency, you have to look to lenders like MaxLend to help you out of a jam.
However, with a poor credit history, you’re limited to where you can borrow from and how much you can ask for. Forced to look to high costing loans with short repayment periods, many consumers end up putting themselves into a web of debt that they can’t get out of, and are only allowed to borrow a few hundred dollars the first time around. If your emergency costs more than that and you can’t get approved by a bank, you’re out of luck.
Determines Where You Live and How Much it Costs
For those who are thinking of purchasing a home, you’ll need a mortgage company to help you. Though there are a lot more programs out there designed to help more people get into a home of their choice, there are still credit guidelines that you’ll need to adhere to. Lenders want to know that you’re trustworthy and that you won’t default on the loan. Though your property is used as collateral, mortgage companies aren’t in the business of managing real estate and the foreclosure process can be long and expensive.
If you have poor credit, the lender automatically views you as high-risk and will be reluctant to supply you with the funds you need to get a home. If you are approved, however, the interest rates are going to be higher, therefore, impacting the total cost of your mortgage payments.
Renters aren’t off the hook either. If your credit isn’t up to par a landlord or property management company has every right to reject your application or request that you pay more. This could mean a higher security deposit or pay upfront for several months of rent to reduce the risk.
Determines What You’ll Drive
Whether you’re on the market to purchase a new or used car if you have a negative credit background, you can expect some trouble along the way. If you have good credit, you can be approved for just about any dollar amount and can, therefore, pull off in any car you can afford the monthly payments on.
If you have a poor credit history, however, the number of money lenders are willing to trust you with is far less. Therefore, putting you in a different class or brand of car options to choose from. If approved, you can also expect to have to pay a higher down payment percentage as well as interest rates over the life of your loan.
Can Ruin Your Chances of Landing a Dream Job
If you’re trying land a dream job in the financial or executive sector, you had better take a look at your credit history. Why? Employers look at this information to determine your worthiness of being in the position and/or getting promoted. Someone who wants to be an accountant, for instance, would probably have a hard time getting a job if they have a credit history filled with late payments and delinquent accounts. Employers want to know that you’re financially responsible.
Even for those who aren’t trying to get into the financial sector, your financial history can impact your ability to be hired. Someone with thousands of dollars of debt, for instance, may not be able to qualify for a job that only offers minimum wages because your debt is too high for the salary you’re asking for. This would essentially mean to an employer that you’ll be working multiple jobs, or will jump at the chance to work for a company that offers more money (a turnover risk for companies).
You may think that a low credit score only hinders you from getting a credit card or a house, but as you can see, it can impact a lot more. It is essentially a window into your ability to manage finances and can label you as a risk to both employers, lenders, and service providers. It is, therefore, imperative that you take your time and build a credit history that reflects your trustworthiness.
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