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Disadvantages of a Bad Credit Score


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A bad credit history affects more factors than just your ability to get new credit. A bad score begins when you start to be considered as sub-prime or when your score is under 680. With a score falling below 560, the situation becomes worse. Having a bad score affects your relationship with the landlord, the service providers, and the employer: all of them see you through an unfavorable light. Here are some of the disadvantages of having a bad credit score:


The world is dynamic, and we have to change jobs. When your prospective employer checks your credit file and discovers that you have a bad credit score, he processes this information and comes to the conclusion that it will be risky to hire you. He may be of the opinion that the manner you handled your credit score is also the manner you will handle the job. He may also conclude that your precarious financial situation will hinder you in the performance of the job due to distractions which it might cause. You may end up not getting hired.


Most credit issuers and lenders think it is risky to lend money to anyone with a bad score. They respond in very unpalatable ways when anyone with a bad credit score requests for credit. To ensure that they minimize their risk, they charge security deposits on the loans or charge a high acquisition fee on the credit being extended. Along with this, they charge very high interests rates. In other words, you have to pay needless fees and a high interest rate simply because you have a bad score and are perceived to be a high-risk debtor.


The bad score will also affect your ability to hire an apartment. A bad credit score means you don't pay your bills promptly, show irresponsibility while paying them, and owe a lot against your account. With such a credit score, the prospective landlord forms the impression that if given the apartment you will not pay your rent promptly. This might not be the kind of tenant he desires to rent his apartment.


Service providers of all kind want their services to be paid for on time. A bad score sends the negative signal that you will not be prompt at paying bills and that you may be irresponsibly while paying them. They may demand that you get a co-signer for assurance that if provided the service you will pay your bills, or they will deny providing the service to you altogether. Whichever option they choose, you have been embarrassed by your bad credit score.


With a bad score, most home loans and a majority of car loans cannot be accessed by you. And for the little one that you're able to access, you will be forced to pay a high interest rate on the loan as well as unnecessary fees. Most of your lenders consider their loan to you as high-risk, and will put in measures in place to get their loans back as quickly as possible.

Sam Kristen is a Financial Expert and owns Credit Report blog. He regularly blogs on Credit repair and talks about how to handle bad credit.


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