It’s no secret that having a low credit score can make your life harder. You might not be able to get loans to go to school, buy a car, or buy a home. You might even have trouble finding someone willing to let you rent an apartment. But did you know that a low credit score can cost you money as well?
Let’s look at five ways having a low credit score can cost you.
1. Higher Interest Rates
Having a low credit score is often the basis for being denied a loan, but if you manage to get one with bad credit, it will come with a higher interest rate.
Having poor credit can mean higher interest rates for credit cards, auto loans, mortgages, and more. And if you’re already struggling financially, this added cost can make paying off a loan take significantly longer.
2. Higher Rent Deposits
If you sign a lease for an apartment with a low credit score, the management company may ask you for more money upfront.
This won’t affect your monthly rent, but you could be asked to pay a significantly larger security deposit when you sign a lease. Why? You’re a bigger financial risk to a landlord with bad credit, and the higher deposit offers them a additional protection if you can’t pay your rent.
3. Higher Auto Insurance Premiums
It’s not just higher interest rates you’ll have to worry about. Your credit history can also come into play when you apply for an auto insurance policy.
Almost every state requires drivers to have insurance, so you’ll need it if you plan on using a car in the U.S. (and other countries). With a low credit score, your insurance company may charge you a higher premium.
4. Higher Cell Phone Costs
With a low credit score, you might not be able to get the cell phone plan you were hoping for. In fact, you might get approved for any traditional mobile contract.
That can leave you paying higher fees for services, missing out on discounts for phones, or being stuck with a bare-bones prepaid plan. In this day and age, not having a cell phone isn’t an option for most people.
5. Fewer Employment Opportunities
Even if you aren’t paying more money because of a low credit score, it could still cost you financial opportunities. Depending on the industry you work in, your credit score can hurt your chances when applying to a new, more lucrative job.
This is especially true in industries where you would be handling money or sensitive data because having bad credit may make you seem unreliable. That probably isn’t true, but potential employers don’t know you. All they can see is a number.
If you haven’t paid much attention to your credit score in the past, now is the time to review your credit history and look for ways to improve your score because bad credit could end up costing you more than you think.
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