How a Bad Credit Score Affects Your Future
Very few Americans even know what their credit score is. This three-digit score typically ranges from 200-850 and is used by lenders to determine whether to extend a loan and what interest rate to charge.
A good credit score is a terrific asset and shows you are a good credit risk. But a poor score can cause more harm than merely being denied for a loan. Instead, it can have far-reaching effects for well into the future, as a recent ReadWrite article has pointed out.
A Poor Credit Score Could Cost You a Job
Employers are very careful about who they hire, even in a hot economy in which the labor market is tight. In addition to running a criminal background check, employers also look at your financial history. And if they find that you have terrible credit, your application could go straight into the “rejection” pile.
Why? Well, many jobs involved handling or dealing with money. An employee with terrible credit might have financial problems and could embezzle or steal from an employer. Someone with excellent credit probably has fewer financial difficulties and therefore is a lower risk for a company.
You Could Lose Out on an Apartment
Landlords also run credit checks on applicants for similar reasons as employers. Your credit history will signal whether you are a good risk. Many landlords are terrified of renting to someone who doesn’t pay rent because it is difficult to evict tenants for nonpayment.
As Money Crashers website reported, some landlords expect a credit score of at least 640, otherwise they won’t hand over the keys. If your score is low, you might need to move to a less desirable neighborhood, which could be much less safe.
A Low Score Makes It Harder to Start a Business
Many small businesses need loans before they can open their doors for business. This start-up capital is necessary to buy equipment, rent a place of business, and purchase supplies.
However, a bank will not extend a loan to a new business that has no credit history. For that reason, the bank will take a close look at the owner’s credit score; and if your score is low, then the bank will probably reject you. This means you will have to rely on credit cards or crowdfunding to start a business, which are not ideal options.
You Might Not be Able to Get a Cell Phone
Who doesn’t have a cell phone nowadays? Unfortunately, most cell phone carriers run a credit check. If your score is low, you might be denied for a plan and have fewer options for texting and messaging.
Tackle Debt with a Consumer Bankruptcy
If you are in financial distress, you should consider whether bankruptcy is right for you. Though it might cause a drop in your credit score, unmanageable debt will ultimately cause your score to tank just as easily.
For more information to discuss your options, contact Nowack & Olson. We are a South Florida bankruptcy law firm that has thousands of happy clients. To schedule a free consultation with one of our Plantation bankruptcy lawyers, please call 888-813-4737 today.