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A poor credit rating can affect your life in a number of ways. Here are eight of the most common ways a poor credit score can negatively impact your future finances and your quality of life.


Getting approved for a loan

Your credit rating has a direct impact on your likelihood of being approved for a loan or credit application. If you have a low, or no, credit rating you will be seen as high risk for lenders. This decreases the chances of getting the loan you need.


Lack of choice when looking for credit and loans

Having a bad credit rating doesn’t mean, however, that you have zero chance of getting a loan or credit. But it will, at the least, limit your choice of products. Anything with low-interest rates or swapping your debts to zero interest rates won’t be offered to you. Many credit cards with additional benefits are those with low-interest rates which are only given to people with a good credit score. As well as having to pay higher interest rates, you’ll also have to put up with borrowing less money or having a credit card with a low limit. Because lenders see a bad credit score as a high risk, they tend to raise interest rates and cut borrowing to lessen the risk.


Finding somewhere to live

Lots of landlords nowadays only want people with good credit scores and that’s why they ask to look at your credit file. If you have a big enough deposit and they know you are in regular work it will help you. But, if they see County Court Judgements or late and unpaid debts on your file, you’ll have a hard time persuading them to let you become a tenant. They will need your permission to do a credit check and they can’t see all your file, only the parts that are in the public domain, like County Court Judgements and bankruptcies.


Having to pay deposits on utilities

It’s not just banks and lenders that check your credit rating, utilities companies do it to. If you don’t have a sufficiently good credit rating, you may have to pay a deposit to establish a service. This is the case even if you have always paid your utility bills promptly.


Higher insurance premiums

A bad credit score will also affect your insurance premiums as insurers also look at credit rating. The higher the credit rating, the lower your premiums, and visa-versa.



Getting a mobile contract

Even Mobile phone companies check your credit file. If they don’t like what they see you may have to go onto a pay-as-you-go phone or possibly a more expensive tariff.


It could even affect your employment

Some jobs, particularly in the finance sector, insist on a good credit history. What they tend to look for are things like high debt amounts and bankruptcy. They are not looking for bad credit per se but for hints that you may not be able to perform your role properly.


It could harm your dream of starting your own business

If you want a loan to start your own business, a poor credit history will severely harm your chances. The quality of your business proposal will not affect this fact.

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