The Cons of a Bad Credit Score
As money becomes more prominent in life, so do our credit scores. At a younger age, individuals and young adults may find that a credit score isn’t something that has always been on their minds. However, once they start dealing with certain aspects, such as mobile phone contracts, scheduled bills, or any debts, the concept of a credit score will soon grow in importance. Having a bad credit score isn’t something that can be easily overcome. In fact, there are actually numerous negative consequences that stem from having a credit score on the poorer side of the spectrum. Thankfully, there are plenty of ways in which our credit can be improved in order to avoid any poorer scores. However, for many people, the main aspect holding them back from perfect credit is motivation. So, here are a few cons of having bad credit scores to push for change.
Higher Interest Rates
When borrowing a payday loan, you may find that the interest rates are higher than you imagined. However, this often depends on external aspects, such as your credit score. As lending to those with poorer credit scores can be risky, lenders and brokers may charge a higher interest rate. Therefore, you’ll be paying much more for your loan in the long run. However, those with higher credit scores can be seen paying less in interest as they are more reliable to lenders. Borrowing a short term loan is not something that should be done often, but, we never actually know when a financial emergency is going to hit. Therefore, it is important always to keep your credit score as high as possible to ensure you encounter lower interest rates if needed.
Seeking Flat Approval
Along with lenders and brokers, landlords also commonly check applicants’ credit scores before making any decisions. If you have a bad credit score, landlords might be reluctant to approve your application for a flat or apartment. This is especially relevant when two individuals are seeking interest in the same location. Typically, the landlord will always choose the more financially reliable applicant. It’s common for landlords to assume that those with poorer credit scores are more likely to fall behind on monthly bills and payments. Therefore, they believe they are putting themselves at risk, meaning the chances of approval are lower.
Similarly to flats and apartments, loans also need approval before an applicant can proceed. LoanPig offers bad credit loans to ensure everybody has the opportunity to find financial freedom, regardless of their previous habits. In fact, most of the time, applications will be rejected or declined if an applicant has a poorer credit score. This is due to the riskiness of the repayments and debts. In fact, studies show that there is an average debt in the UK of roughly £50,000 per adult, proving that money isn’t the easiest topic. For financial tips and advice, click here.