Virtually everyone knows that bad credit makes getting a loan difficult if not impossible. If you can get a lender to agree, it's likely you'll have to pay a significantly higher interest rate, or find some kind of collateral to secure the loan.
The cost of borrowing money for a car, a house, or anything else can rise dramatically. Those with truly poor credit may be forced to resort to band-aid solutions such as payday loans, possibly digging a financial hole from which they may not be able to recover.
This is hardly the only way bad credit can impact your life. A problematic credit report can affect your ability to do a variety of basic life tasks those with good credit take for granted.
Listed below are a few of the most common unexpected issues those with bad credit face.
Getting a Job
Finding a suitable job can be tough under optimal circumstances. If you've got bad credit, the task often becomes significantly more difficult. Employers frequently check the credit reports of applicants during the screening process. Negative information can lead to job offers being rescinded, or applicants being taken out of consideration.
Not all companies do this, however, and there are a few states where applicants have some legal protection against the practice. For certain jobs, such as law enforcement or a position that handles finances or money, a pre-employment credit check is all but guaranteed. If you are denied a position based on a credit report, employers are supposed to send a letter alerting you to this fact. In practice, however, this doesn't always occur.
Finding a Place to Live
A credit check is a routine part of leasing an apartment, and a poor report can prevent you from renting at your preferred location. If this happens, you have a few options you may wish to pursue.
First, you can offer to leave a larger security deposit, to offset the elevated risk the landlord or leasing agent believes they may be incurring. Alternatively, you could offer to pay several months in advance. If money is an issue, a co-signer may be able to help you secure living quarters by agreeing to assume liability for your lease.
Getting a Phone, Wifi or Cable
Most cellular phone providers will run a credit report before agreeing to sell you a subsidized phone. If your credit isn't up to snuff, you may have to opt for a prepaid plan and pay for your phone outright.
Cable and satellite providers also sometimes run credit checks before you sign up for service. A poor score can impact your ability to get the best rate, or even get service at all.
It's becoming more common for large insurers to run credit checks before issuing auto insurance and other policies. If your score is found wanting, be prepared to pay a higher monthly premium.
Poor credit can do more than simply prevent you from getting a credit card or loan. It can make a job or apartment search much more difficult, and significantly increase the amount you pay for basic services such as insurance, cell phones or Internet coverage.
Consider this information carefully before you run up unsupportable levels of debt, as bad credit can make day to day life much more difficult to navigate.