Bad Credit Score
TweetWhat Is Considered A Bad Credit Score?
A bad credit score can wreak havoc in many areas of your life. If you have a bad credit score you aren't likely to qualify for new credit or loans. Even if you don't like using credit cards you will usually need one for things like: reserving a hotel room, renting a car, setting up utilities, getting a cell phone account, etc. And a bad credit score not only interferes with you getting a loan or a credit card it can also prevent you from:
- Getting a job. Many employers base their final decision on the applicant's credit report. The status of your credit report gives the employer an idea of how dependable you are likely to be.
- Getting an apartment. Most landlords do credit checks to see if potential tenants are financially responsible.
- Getting auto or homeowners insurance. Insurance brokers know that statistically more claims are filed by policy holders who have poor credit. If you have poor credit, you will be charged a higher premium or denied altogether.
What is considered a bad credit score? Generally speaking, anything below 620 is a bad credit score. You are going to have a very difficult time getting anyone to lend you money. If you happen to qualify for a loan, your interest rate could be as high as 36%. And on the off-chance you get a credit card, your interest rate will be in the mid to high 20% and you'll most likely be charged a security deposit or high acquisition fee. You will end up paying much more for purchases due to exorbitant interest and unnecessary fees. You may also be charged more for insurance rates and some employers may even deny you a job.
A credit score between 620 and 680 is considered sub-prime; not necessarily bad, but not good either. Here you are getting into dangerous territory and will likely pay much higher interest rates, pay higher fees and have lower credit limits. Some lenders and credit card issuers may even deny you altogether.
How much is your bad credit score costing you?
Example 1| Credit Status | Rate | Payment | Cost of Bad Credit |
|---|---|---|---|
| Excellent | 5% | $566.14 | $0.00 |
| Mildly Damaged | 8% | $608.29 | $2,529.00 |
| Damaged | 12% | $667.33 | $6,071.40 |
Example 2
| Credit Status | Rate | Payment | Cost of Bad Credit |
|---|---|---|---|
| Excellent | 5.5% | $1,022.02 | $0.00 |
| Mildly Damaged | 8.5% | $1,384.04 | $130,327.20 |
| Damaged | 10.75% | $1,680.27 | $236,970.00 |
You can see how having a bad credit score negatively impacts your life. Do yourself a huge favor and work on repairing your credit and raising your credit scores; life will become so much better.
