Credit scores have become extremely important in recent years. Your score can have a direct impact on numerous aspects of your life, both positively and negatively. A good score, for example, can secure the credit you need, when you need it and at competitively low rates.
If you have bad credit, on the other hand, it can cause a lot of problems for you. Here, we’ll look at just some of the effects of having bad credit, and how you can fix it.
What is bad credit?
It’s difficult to put an actual figure on what bad credit is. This is because each creditor can score you slightly differently to the next. However, generally speaking, a score of 0-278 is considered to be very poor, while a score of 279-366 is considered poor. If your credit rating is anything up to 366, it will, therefore, be classed as “bad credit”.
How can bad credit impact your life?
If you do have bad credit, it can have a surprisingly negative impact on your life. Firstly, it can affect your chances of getting a mortgage or even getting a rental agreement. Some lenders will simply reject your mortgage application if you do have a bad score, while others will charge you increased interest to accommodate for the poor rating.
Similarly, landlords and estate agents now carry out credit checks to ensure potential tenants can afford the monthly rent. So, if you do have a bad score, it could cause your rental application to be rejected, leaving you with very few options with where you can live.
Having a bad credit score reduces your chances of getting accepted for any type of credit. Even if you do manage to find a lender who specializes in bad credit, you’ll still end up paying far more than you would if you had a good score. This could make borrowing credit unaffordable if the interest rates are too high.
How you can fix it
If you do have a bad score, there are lots of ways you can improve it. Checking for any errors on your report and disassociating yourself from your ex-partner financially are a good starting point. You could also set up a basic bank account with a company such as Think Money, to ensure your bills are paid on time. Paying any debts off as quickly as you can also make a huge difference.
As you can see, bad credit can have a negative impact on your life. However, there are creditors and mortgage lenders who do consider those with bad credit. If you want to avoid paying excessive interest, taking steps to improve your score is crucial.