We all know that managing your credit is vital to financial success, but did you know that a bad credit score or blemishes on your credit report can hold you back from getting the things you need in every day life? Of course big ticket items like home loans and car loans are much more difficult – or impossible – to get without a good credit score, but you might be surprised what other day-to-day purchases, services, and even your ability to generate income are closed to you if you have a subpar score. So remember to control your debt, check your credit report regularly, and contact Blue Water Credit in advance if you’d like to improve your score or you’re gearing up for a mortgage or any other big loan.
Here are 15 things that are difficult or even impossible to get with bad credit:
1. A mortgage loan.
To clarify, you can still buy a house with bad credit if you have the full purchase price sitting around in cash. But for the rest of us who need to apply for and take out a mortgage, the difference between a mediocre or a great credit score could cost you tens of thousands of dollars in interest over the life of the loan – or even get you flat out denied!
2. Renting an apartment.
Maybe you don’t qualify to buy a house because of your credit score, but you can still easily rent an apartment or house, right? In fact, many private landlords and property management companies check your credit score these days, and their credit requirements are becoming more stringent.
3. A cell phone contract.
Cell phone carriers gauge risk just like any lender because they don’t want a customer running up a big bill and then disappearing on them. So carriers like Sprint, Verizon, and AT&T will run your credit to make sure you’re not a gamble. If you don’t have good credit there are still ways to get a phone but they probably will make you pay a big deposit, charge you full price for an iPhone, and may even insist you start out with a basic prepaid cell phone.
4. Some jobs.
Increasingly, employers are checking the credit reports of perspective employees, especially for government jobs or jobs in the financial sector where handling money is involved. It’s estimated that now about 47% of employers do credit checks as part of their background investigations before hiring. So if you want that good job, you might need good credit!
5. Married.
When you get married, your debts become joint obligations, so your future spouse may be wary of taking on your bad credit and out of control debt.
6. A car loan.
You’ll probably want to take out a loan when you buy a car, whether from the dealer or your own bank. But without good credit, you’re likely to be charged exorbitant interest rates and have to put down a huge deposit, or you might get denied outright. Here are some sample credit guidelines for car loans. With a credit score of 550 or lower a cosigner is required for auto loan, and only about 50% of car buyers have a score over 720.
7. Financing from a jeweler.
Jewelers typically work by extending installment loans to their clientele, which is different than your normal credit card. But most jewelers want to see a 700 score before they issue a loan, and even installment loans for smaller items require at least a 640.
8. A credit card.
Credit card companies are intricately involved in the game of gauging credit risk. You’ll only get approved for the best credit cards with the best interest rates if you have good credit. If not, you’ll be charged higher interest, higher fees, or might even need to start with a secured card.
9. Financing for dental Care.
The majority of health insurance plans don’t cover major dental work, so instead people usually set up a loan or payment plan with their dentist’s office. But if you have bad credit, you’ll be denied and won’t be able to get that procedure or surgery you need. For procedures over $1,000, dentists won’t even schedule you in before running a credit check and receiving proof of payment.
10. Financing for cosmetic surgery.
Plastic surgery and other elective surgeries aren’t usually covered by health insurance, as well, and so patients often depend on financing. But with a low credit score they’ll either charge you ridiculous interest rates (up to 29%!) or deny your request all together.
11. A business franchise.
If you wanted to become the owner of an established franchise, like a Subway or a Baskin Robbins or any other, you’ll need good credit. A bad credit score will block you from the franchise financing, result in a higher down payment, and also stop you from getting a commercial lease. The down payment for a franchise varies widely, but is about $500,000 on average for a McDonalds!
12. A business loan.
If you want to take out a line of credit or business loan from the bank, they’ll want to see good credit. With a score lower than 640, the bank will almost always automatically deny your application.
13. A student loan.
There are some federal student loans that don’t factor in credit scores, but most of them require a solid credit history. It’s been estimated that someone with a 650 score pays up to $8,000 more in interest over the life of the loan than someone with a 750.
14. Car insurance.
Insurance companies now check credit, and you’ll pay a higher premium with a lower score.
15. A personal or bank loan.
Just about any other time a bank or financial institution is set to lend you money, they’ll require a credit check to make sure you are a good financial risk. We usually need money on short notice in case of emergency, so keep a good credit score and be prepared so you’re not taking a chance!
