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Bad credit can cost you big bucks. In fact, bad credit can cost you hundreds and even thousands more a year. If you are looking for an unsecured credit card with a 600 credit score, you are probably out of luck. So, it’s worth knowing how bad credit can hold you back. Here are three activities you can’t do with bad credit:
Having bad credit can block you from buying a home. The minimum credit score for qualifying for most traditional mortgages is 620. Most banks won’t offer you a conventional loan if you don’t meet minimum requirements, even when providing a large down payment. That’s because most lenders consider poor credit a high risk. Having bad credit can also prevent you from renting homes, apartments, and even a room. A landlord or management company may deny approving your rental application if they consider you a high risk for not paying your rent.
Bad credit also prevents you from getting the best interest rates when shopping for a car. For instance, individuals with bad credit often get double-digit auto loan interest rates. Having a high-interest rate can balloon the cost of a $20,000 car loan on a five-year term to nearly $30,000. That means you’ll have high payments. Moreover, falling behind on your loans or defaulting can result in added debt or even a car repossession on your credit report.
Most credit cards available to individuals with poor credit are nearly non-existent. You’ll also face higher interest rates that can easily exceed 20 percent annually. You may also have to pay a yearly fee to maintain the card or even pay a deposit for a secured credit card. The best credit card perks come with the best credit.
Even if you have bad credit, you can still repair it. For instance, you can get a side job to help pay down your credit cards and lower your debt while increasing your income. You can also contact your lenders to arrange a payment plan or settle on a past due account. You can also hire a credit repair company to help you repair your credit. It’s also a good idea to contact a reputable licensed professional to help you get your credit back on track. Check out these reviews of legitimate credit repair companies to know what they can do for you.
While bad credit can block you from accessing housing or favorable interest rates, it’s possible to repair your credit. Just follow the tips mentioned here to help you fix your credit and consider your current financial situation before taking out new loans.