If you have a not so perfect credit rating, you might have noticed that many doors start closing in front of you. We all know that we cannot get the advertised rate with our bad credit score, and we are likely to be declined cards and loans, but there are some little known, serious effects of a bad credit rating that can prevent you from reaching your life goals. Find out more below.
1. Job Offers
You might not think that your employer is interested in your personal finance, but some companies check your credit rating before they make you an offer. It is obvious that banks and financial institutions will vet you thoroughly to make sure you are not likely to have a weak point that makes you more likely to get involved in money laundering. However, some companies that deal with important customers will also want a perfect credit rating. If you are offered a company car, your employer will want to know that they can trust you and your insurance will not be sky high.
2. Insurance Premiums
If you have a bad credit rating, you are likely to be offered higher insurance premiums, as you are paying the yearly contract on a monthly basis, and pose more risk to the company. People who are in financial trouble are more likely to suffer from an accident or make claims to cover their costs. Even if you are not planning on making a fraudulent claim, they will not trust you, and your insurance will cost you more.
3. Refinancing
Once you are in debt, it is hard to get a deal that reduces your monthly bills if you have bad credit. In case you want to save interest on your mortgage and get a better deal, you might be declined the offer because you are not trustworthy enough for the bank. If you have a credit card with late payments, and unmanageable interest, you might consider taking out a credit card consolidation loan that is designed for people like you and helps you rebuild your rating.
4. Relationship Issues
Your bad credit rating can also affect your relationships. Make sure that you tell your new partner about past issues. If you apply for a loan or mortgage together, you might be the one to blame for the refusal, and this can put a strain on your relationship. Don’t hide your financial history from your partner, and work together to make sure that you are discussing your options carefully.
5. Renting a House
If you want to privately rent a house and you have missed payments on any accounts, your landlord and the agent might not trust you. Even if you have been paying your rent on time, but you were late on credit card and loan repayments, you can be declined. This leaves you with limited choices of where to move.
If you would like to achieve your financial and personal goals, make sure you maintain a healthy credit rating and make your payments on time. Your credit score is checked regularly by banks, employers, and insurance companies.
Featured image from CafeCredit – via Flickr.
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