Credit scores represent a person’s credit worthiness, designed to show a lending institution who is a good investment. Banks believe that credit scores are a good indication of an individual’s future financial behavior. Your life will be negatively affected with a bad credit.
- Car insurance. The insurance carrier in most states check your credit score when arriving at a rate. Depending on the level of you credit score, the insurance carrier may not approve you for insurance coverage at all.
- Mortgage loans. Financial institutions look at your credit score during the process. Bad credit means possibly being denied a loan or can result in being charged higher interest rates.
- Credit cards. A good credit score gives you an interest rate between 10 percent and 19 percent whereas a bad credit score gives somewhere around 22 percent and up.
- Car loans. Most banks will check your credit score before approving your financing when you purchase a vehicle. Interest rates could very up to 2 percent depending on your credit score.
- Job hunting. Under the Fair Credit Reporting Act is is legal for a future employer to review your credit report with your written approval. Hiring managers can use this information when making their decision.
(Source: FINRA Investor Education Foundation, Sallie Mae, TransUnion, Experion, U.S. Department of Housing)
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