Having a bad credit score may be worse than what many people think because credit scores don’t stop with credit. Your credit score affects many more things apart from your access to credit. Here’s why you must avoid a bad credit score.
1. UK landlords are wary of bad credit scores
Since a credit score is an indication of a person’s ability to service their debt, a bad credit score can be taken to mean that you have a problem paying your expenses i.e. rent. In the UK, landlords have the right to ask potential tenants for their credit reports. A bad credit score can result in bad rental terms. In the worst-case scenario, you may not be able to rent certain apartments/offices if you have a bad credit score. To avoid missing out on great rental opportunities and terms, it’s important to do whatever it takes to maintain a good credit score.
2. It is harder to get a job if you have a bad credit score
Most employers in the UK and other parts of the world reserve the right to request for credit information from potential employees. Employers usually use this information to make hiring decisions. Although there are regulations dictating the extent to which employers can use credit information to make hiring decisions, you can lose a good employment opportunity because of a bad credit score.
3. Auto insurance may cost more if you have a bad score
Some auto insurers have found a direct correlation between creditworthiness and a person’s propensity to cause an auto accident and/or file dubious claims. Some auto insurers also assume people with bad credit scores are less likely to pay their premiums on time. Although this isn’t necessarily the case, some insurers use bad credit scores as reasons for increasing premium rates or denying coverage altogether. As a result, avoiding a bad credit score will help you avoid paying high auto insurance rates.
4. Professional licensing problems
You may also find yourself facing professional licensing problems if you have a bad credit score. UK Government agencies which regulate professions are allowed to use credit information when licensing many professionals. You may have problems getting your license as a professional i.e. financial adviser if you have a bad score even if you have met all other requirements.
5. Credit report errors can land you into legal problems
A wrong entry can ruin your credit score. If your credit score is bad because of errors, you can find yourself in legal problems since authorities i.e. investigating agencies usually pay attention to discrepancies in financial documents and such discrepancies can be used as a basis for investigations in financial fraud cases among other related cases. To avoid such problems, you must check your credit report frequently for errors.
6. A bad credit score can ruin your personal relationship
Relationships such as marriage can be affected by bad credit scores in the event where the bad score is caused by defaulting on debt. Most people wouldn’t be comfortable having serious relationships with individuals who have taken too much unmanageable debt. So, if you’re thinking of getting married, you need to work on your credit score. You are also bound to get into a lot of problems with your friends, family members, etc., if you don’t repay the money you have borrowed them and other people.
7. A bad credit score can cause you a lot of stress
Access to credit is very important for a person to be able to advance themselves financially as well as meet day-to-day expenses. If you can’t get a loan because of a bad credit score, you are bound to get stressed. You are also bound to be stressed if you can only qualify for bad credit terms i.e. high-interest payday loans. Stress can lead to other health problems like depression.
A bad credit score can cause you a lot of unnecessary problems that go beyond accessing credit. You are bound to have a difficult time finding a place to live (rent) if you have a bad credit score. The same applies to securing employment, getting car insurance and securing a professional license. A bad credit score can also ruin your personal relationship and land you into legal as well as health problems. The importance of avoiding bad credit scores can’t, therefore, be overemphasised.