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Getting To The Point – Services

What Bad Credit Can Do to Your Life

A credit score is a numerical representation on the credit-worthiness of an individual, which is based on a level analysis of a person’s credit files. Financing companies produce a credit score, ranging from 300 to 850 with 850 as the highest score, for a borrower with a Social Security number using data from the person’s previous credit history and lenders use a credit score to evaluate the probability that a person repays his debts. The borrower’s personal finances and his capacity to borrow are affected by credit scores and if you’re not performing well with your credit score, which means you’ve got bad credit, the following effects are bound to impact you.

Difficulty borrowing money

Getting a low credit score will directly affect your likelihood of securing approval for a new loan or a credit application or less likely find a willing lender. Even if your score is almost close to the cut off score level, for example your score is 698 and the qualified score is 700, many lenders don’t make loans where the credit score falls below the accepted level.

Confronted with higher rates when you borrow

Money lenders and financing companies are relying a lot on a borrower’s credit scores such that when a borrower’s credit score is a few points way below the qualified score, his chances of borrowing may be slim but if he gets his loan approved, he will be confronted with a higher rate and with additional restrictive terms from the lenders or financing institutions. Depending on how the loan is structured, but the higher rate difference can cost you tens of thousands of dollars to the total cost of a mortgage, and the same principle treatment is applied to auto loans, home improvement loans, personal loans, and credit cards.

Trouble renting an apartment

If you’re applying for an apartment lease and your credit score is low, the landlord will likely demand for a pre-lease credit check, but this depends on the kind of apartment you intend to rent, because well-kept, modern apartments in a desirable neighborhood will require a higher credit standards compare to substandard dwelling units in undesirable areas, where landlords may be lenient to the credit score.

Problem looking for a job

If you’re looking for a job, there’s a high probability that your credit status will be checked by the company you are applying to, most especially if the position you are applying requires a security clearance. Ideally, an employee can work efficiently if there are no distressing factors, which he/she is carrying, one of which is a bad credit, and that is why employers check on the credit condition of an applicant before hiring, in which this practice is actually banned or restricted in a handful of states in the US.

Strain on personal relationships

Your credit score together with your overall credit profile can break or not your family life, as well as your personal relationship, since both you and your spouse’s credit profiles can affect your ability to qualify for an auto or home loan that you’re applying together, as lenders look at both profiles and assess your household’s overall credit risk. If one of you falls lower in the credit qualification, most likely a higher interest rate or a larger down payment will be required and, if you fall behind payments, you not only suffer the consequences of a low credit card score, but a strain in your family relationship is also gradually developing as an outcome of stress from being confronted with these financial issues.