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DISADVANTAGES OF HAVING A BAD CREDIT

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DISADVANTAGES OF HAVING A BAD CREDIT

You might not be aware of the effect ignoring your bills and maxing out your credit cards might have on your credit card.  The amount of debt you have incurred as well as the timeliness of your credit card payments have the most significant effect on your credit score. Behave badly in any of these areas and your credit score will go down. People often wonder why so much importance is being attached to credit score since a lot of businesses access people based on their credit score. Having a low credit score can make life extremely difficult​ for you, from getting a place to live to getting a job. Below are some of the most common disadvantages effects of no credit or bad credit.

 You will be required to make security deposits on utilities

When you apply in Utility companies (electricity, phone, and cable), your credit score will be accessed as  part of the application process and If you have a bad credit history, you may be asked to pay a security deposit in other to establish service in your name, even if you have been paying your utility bills on time. You will be charged the security deposit upfront before the service can be established in your name.

You run the risk of having high interest rates on your loans and credit cards.

Your Credit score shows the possibility that you would default on a credit card or loan obligation. Having a low credit shows that giving you a loan is a huge risk compared to someone with a better credit score. You get charged a higher interest rate by creditors and lenders due to this.

If you get approved with a bad credit score, you will have to pay more interest over time than you would have done if you had a better interest rate and credit score. It automatically means the more you borrow, the more interest you will have to pay.

Your Credit and loan applications may be rejected

There is a limit to the amount of risk creditors are willing to accept and if your credit score is too low, they might not want to take the risk of lending to you at all. Your applications will get denied with bad credit.

You might have difficulty getting approved for an apartment

Most landlords check credit before approving an individual’s rental application and having a bad credit can make them turn down your applications thus making it difficult for you to rent an apartment or house or they might request  higher security deposit if you have a low credit score.

You will experience difficulty buying a car

When you apply for a car loan, banks check your credit before giving you the loan and if you have bad credit, you might get denied the car loan altogether. Or, if you get approved, you may be given a high interest rate, which means you will be paying a higher amount monthly.

You may not find it easy getting a phone contract

Cell phone companies also check your credit score. They try to access how reliable your payments would be because they will be extending a month of service to you. If the discover your credit is bad, you may have to get a prepaid cell phone, which offers a month-to-month contract which is  more expensive, or you will leave without one at all. You will have to pay upfront for a new phone If you are making payments on your cell phone or leasing and your payments may be higher if you have bad credit score.

You might get turned down when you apply for jobs

Some jobs, especially those in the finance industry, require you to have a good credit history and you can be turned down due to bad credit report, for example high debt amounts, outstanding bills or bankruptcy.

Employers access your credit report and not your credit score because they’re not necessarily checking for bad credit, but for reports that could have effect on your job performance.

 You will be charged higher insurance premiums

Insurance companies usually check credit and they argue that lower credit scores are connected to higher claims filed. Due to this, they check your credit and charge a higher premium if you have low credit scores, not putting into consideration the number of claims you have actually filed.

You will experience difficulty starting your own business

A lot of new businesses require banks loans to help fund their startup and a bad credit history place a limit on the amount you can borrow to start the new business, even if you have a solid business plan to support your business success.[/vc_column_text][/vc_column][/vc_row][vc_row el_class=”seo-link-sec”][vc_column][vc_empty_space height=”50px”][vc_column_text][slick-slider category=”28″ design=”design-5″ speed=”2000″][/vc_column_text][/vc_column][/vc_row][vc_row el_class=”call-out-sec stretch-sec” css=”.vc_custom_1568018042545{background: rgba(0,0,0,0.88) url(https://imbonline.co.uk/wp-content/uploads/2018/07/counter-wrapper.jpg?id=1382) !important;background-position: center !important;background-repeat: no-repeat !important;background-size: cover !important;*background-color: rgb(0,0,0) !important;}”][vc_column][vc_column_text]

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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