Reading Time: 7 minutes Bad Credit, Big Problems: 13 Ways Your Score Might Be Holding You Back
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Having good credit is essential for maintaining a healthy financial situation. If you are looking to buy a home or need to take out a loan, having good credit gives you access to the resources you need to succeed.
Having bad credit can significantly limit what you can do. Below we share things you cannot do with bad credit.
Table of Contents
1) Renting An Apartment
You might not qualify for your mortgage loan because of your credit, but you’ll still be able to rent an apartment, right?
Many property management companies and private property owners will not rent to people with low credit scores, with most demanding a credit score of at least 670 for approval.
These days, their credit requirements are becoming ever more stringent. Poor credit may also require higher security deposits or advance rent payments, further straining your financial resources.
2) Applying For Utility Services
Your credit score can also affect your ability to get utilities in your name. Many companies check your credit before allowing you to open an account.
A good credit history can make it easier for you to get utility services. Or better said, poor credit makes it harder.
If you find yourself running into this problem repeatedly, it may be time to look at your credit score and see what you can do to fix it.
Did You Know?: You Can Lower Utility Bills: How To Save On Utilities
3) Securing A Cell Phone Plan
In the same way that some utility companies check your credit before opening an account, some cell phone carriers will also look into your past charge-off or bankruptcy.
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If they find a blemish on your report, they might not be willing to offer you a contract. That said, it’s worth calling around and seeing what plans are available to you, even if the best option is prepaid.
Related: 13 Reasons Why A Good Credit Score Will Save You Money
4) Buying Or Starting A Business
Finding funding for your business can take time and effort when you have bad credit. Business loans and startup financing are often only available to those with good credit scores since these loans are more of an investment.
It’s risky to lend to someone who wants to start a business if that person has struggled to manage their own money.
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5) Getting A Mortgage
One challenge many people with bad credit face when getting a mortgage is securing the necessary down payment or collateral.
Many lenders will require a down payment of 20% or more. (Unless you know How To Buy a House with Little or No Money Down)
20% down can be difficult for many borrowers to afford on top of the other associated costs of purchasing a home.
In addition to the high down payment requirements, lenders may ask for additional collateral to secure the loan, such as stocks and bonds.
Because of these potential challenges, it is crucial to work with a lender specializing in bad credit mortgages who can help you find the best terms for your unique situation.
Related: Other People’s Money. Carleton Sheets And No Money Down
6) Employment
You will face many challenges when trying to get a job with bad credit. One of these challenges is that employers may be hesitant to hire you because they don’t want to take any risks, and having bad credit can make you seem like a risk.
Many employers nowadays run background checks on prospective employees; any bad marks against your name could impact their decision to hire you. Pre-employment credit checks are prevalent for financial or government jobs.
Related: 12 Flexible Jobs That Pay $20 an Hour (With Video)
7) Get Married With Bad Credit
Okay, you can get married with bad credit. But it’s hard. So many marriages fight over money matters. When it comes to money, being in a relationship with someone with bad credit can make things difficult.
Poor credit creates stress, arguments over finances, and can put a substantive strain on the relationship. It’s best for both partners to work on repairing credit issues before tying the knot.
8) Car Loan
You can take out a loan to purchase a new vehicle, either through a dealer or your bank. If you don’t have good credit, you’ll more than likely have to pay exorbitant rates for interest, you may have to put down an abnormally sizable down payment, and you may even be denied outright.
Poor credit scores typically face much higher costs when financing a car through higher interest rates and bigger down payment requirements.
9) Student Loan
Taking out a student loan is often considered a significant advantage in life- it gives students access to higher education and helps them achieve their professional goals.
When you have bad credit, getting approved for a student loan can be challenging. This is because private lenders typically offer student loans and perform credit checks on all applicants as part of the approval process.
Related: How to Save Money in College: The Secrets that Save Students Money!
10) Get the Best Rewards Credit Cards
You can get a credit card, but having bad credit can make it difficult to get approved for a rewards credit card. Issuers often reserve their most lucrative rewards programs and bonuses for applicants with excellent credit scores.
If approved for a rewards card with bad credit, you may be offered a card with high interest rates and fees, which can limit your ability to earn rewards and manage your finances effectively.
Related: Finance Expert (With 820+ Credit Score) Debunks Credit Card Myths
11) Get a Personal Loan
Bad credit can make it challenging to get approved for a personal loan. If you are approved, you may be offered a loan with high interest rates and fees, which can make it difficult to pay back the loan, which can lead to further financial difficulties.
Personal loans from banks and credit unions are largely off-limits to borrowers with dings on their credit reports outside of high-interest subprime lenders.
12) Get a Professional License
Having bad credit can impact your ability to obtain certain professional licenses, such as a real estate or medical license. This can limit your career options and make it harder to achieve your professional goals.
Many licensing boards review applicant credit histories as part of assessing finances and trustworthiness for client-facing roles.
Related: 23 Easy To Get Certifications That Lead To High Paying Jobs
13) The Most Important Thing You Can’t Do With Bad Credit: Give Up
While having bad credit can be challenging, there are steps you can take to improve your financial situation. By working with a reputable lender specializing in bad credit mortgages, you can find the best possible terms for your unique needs and circumstances.
Overcoming obstacles and achieving milestones like securing a job, purchasing a car, or getting married can help you get back on track and start rebuilding your credit.
So don’t give up. Keep working hard, and you can overcome these challenges and achieve your financial goals.
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