The Hidden Impact of Bad Credit on Your Everyday Life

 

According to research by Debtadvisorycentre, “about 6 million people in the UK face denial for everyday products and services due to bad credit score.” Most individuals face reactions regarding getting new mobile numbers or registrations. Alternatively, some face difficulty securing car insurance to qualify for car financing. It is thus better to analyse and work on your credit score first.  As the spokeswoman for the Debt Advisory Centre, Melanie Taylor says –

“It is really important that everyone checks their credit score regularly. One can do so with the help of credit agencies offering free credit check services. Accordingly, they can take necessary actions to improve their credit history as soon as possible.”

Analyse and repair aspects like- unpaid debt, ensure valid and permanent residential history, improve employment history, etc. It will help you eliminate the negative effects of a bad credit history and achieve lifestyle goals timely.

What is a bad credit score?

A bad credit score is a negative assessment of your finances. A credit reference agency concludes it by basing and analysing a few parameters. Aspects like CCJ, bankruptcy, missed payments, loan defaults, and lack of credit history can lead to bad credit. It affects your reliability for credit cards, car loans, or mortgages. Thus, you may struggle to qualify with a low credit rating.

This mismanaged finance reveals one’s casual take toward money-based responsibilities. Individuals with credit scores 0-560 fall under the bad credit rating category, according to Experian Credit Agency.

A few Facts to know about credit scores

When you apply for a credit card or a loan, the provider analyses your past behaviour. They check whether you settle the loan timely. They check the applications you made recently, the amount you owe, and credit products that your profile reveals.  Here are other aspects to know about credit score:

ü  No two persons can have one credit score

ü  Credit scores may differ according to credit agencies

ü  Credit score falls slightly after a detailed credit check

ü  Individuals with no credit history are also deemed to have bad credit

ü  The higher the credit scores, the lower the interest rates

ü  You can fetch cheap rental, good job, and mobile registration with a good credit

How does a bad credit rating affect your lifestyle needs?

Your credit history and score tell a lot about how you manage your finances. It showcases your character level, financial responsibilities, and seriousness towards it. Individuals with poor or bad credit ratings fall under the risky category. It can impact your life significantly. Here is how a bad credit rating may impact your lifestyle and everyday needs:

1)     Difficulty in renting an apartment

A good credit rating is not only mandatory for a mortgage. It is also important to rent an apartment affordably. It reveals the person’s ability to repay the rent timely. A landlord checks the person’s credit report before finalising the rental agreement.

Landlords depend on the rental income for property maintenance and investing in buy-to-lets. Not paying the rent on time puts landlords in a bind. In this case, they may reject a prospective tenant or demand a high deposit amount. However, if you struggle to repay the past 3 months' dues, you, too, stand on the brink of eviction.

Non-repayment affects your credit history also. Thus, avoid the hassle by knowing the numbers and paying the dues timely. You can do it with the help of very bad credit loans from direct lenders in the UK with no credit check facility. Such instant cash loans help you get up to £3000 without affecting your credit scores. Limited documentation, soft credit checks, and instant payout make it a popular option.  

2)     Applying for mobile phone services

Mobile phone providers check your credit rating before providing the connection. A history of negative payments or information may affect the approval. The mobile service provider company may demand a letter of guarantee from someone who can pay the bill if you fail to do so. Moreover, if you miss a payment on your bank account linked to mobile services, it goes to collections. This may affect your credit scores further.

3)     Seeking favourable employment opportunities

Just like a landlord doesn’t want to take risks with renting, no employer wants to hire a person with a confused identity and finances. Thus, nearly every valid employment company analyses your credit report.  It helps him analyse your employment history, non-working period, job type, and other financial obligations. They also check the residential address and the consistency.

However, every employer must get permission before viewing your credit report. They generally do so with a form that you must fill out to grant access. Analyse the purpose of checking one and provide access accordingly.

4)     Costly premiums on health and car insurance

Yes, your credit score may affect the price of the car insurance coverage. According to facts, drivers with poor credit histories are more likely to make claims. The car insurance providers charge extra to counter this risk. Thus, you may face high interest rates on car insurance or high premiums. It off-charges the risk of non-repayment.

Alternatively, car insurance coverage for bad credit histories is rare to find. Thus, you may encounter challenges in repayment and premiums. Missing one could further affect the interest rates. You may pay more in that case.

5)     Costly loans and credit card approvals

Getting a loan or a credit card with bad credit proves costly. Most credit providers require the person to have a decent credit history and income. The basic affordability criteria are as follows: Individuals having poor credit history share the risk of missing payments and loan defaults. Thus, one may need to provide additional proof to qualify.

For example- one may contact a direct lender for a loan in the UK to repair the bathtub. However, not qualifying the basic affordability criteria may require the person to provide a guarantor. He may help one qualify for the loan by providing his income and credit history as proof of responsible payments.  It makes one fetch low interest and favourable terms.

Similarly, you cannot benefit from credit cards featuring amazing deals and discounts. Qualifying for one requires you to have a good history of clearing credit card debts in a timely manner. Alternatively, you may miss some serious holiday discounts and attractive rewards on credit cards.

6)     You may struggle to fund utilities

Just like it is challenging to get rent and mobile services, getting energy subscriptions proves disturbing when you have a bad credit profile. No energy provider can trust a person with pending dues. Every utility company needs to know how you will pay for the services. Past due balances, collections, and other negative areas prove a red flag. The service provider may either charge high, demand a deposit, or reject the application immediately. The deposit will serve as the payment if you fail to pay.

Bottom line

These are some of the most common ways a bad credit history may affect your everyday needs. Understand the aspects that affect the credit history the most. It could be pending bills, inconsistent employment history, or address. Improve these aspects to optimise your credit history. It showcases your responsibility to take care of finances and avoid hassles accordingly.