Having a good credit score gives you a better chance to qualify for a loan, no matter what the loan is for. People with good credit scores tend to have lower interest rates than people who don’t pay their bills on time. Many benefits come with having a good credit score.
But if you have a bad credit score, you’ll have to deal with some obstacles. Here are some of the reasons to avoid having a bad credit score.
1. Mainstream Lenders See You as Risk
If your credit score isn’t impressive, you’ll find it hard to get a loan from big lenders as they see you as a risk. They will scrutinize your financial records before they approve you for a loan.
If they see that you have some red flags on your profile, you’ll be rejected. This is why mainstream lenders are not too keen to deal with people who don’t have a good credit score.
2. You Have Less Eligibility to Refinance With a Lender
If you have a bad credit score, you’ll be allowed to refinance your loan with a lender. However, the interest rate will be higher because of this risk.
In fact, many lenders who can help those who can’t qualify for secured loans impose exorbitant rates on them. This is one reason why people with bad credit scores often pay more for their loans.
3. Your Insurance May Go Up in Premiums
A bad credit score can impact your insurance premium. Not only will you be asked to pay more on premiums, but the insurer may also refuse to give you coverage on some basic parts of your life. This is because it can equate this factor with an increased risk on their part.
4. It Increases Your Chances of Being Denied Loans in the Future
If you can’t take care of your borrowing history, you’ll find it hard to get loans from many lenders. Repayment of loans is an indication that you can handle your money, and creditors like to see this behavior.
A past loan default history only proves that you’re a bigger risk to lenders. Even online lenders that offer bad credit loans Montreal services will find it hard to give you their money.
5. It May Affects Your Job Prospects
Having a bad credit score can affect your job prospects, and some companies may turn down your application because of it. Once they discover you have poor ratings or scores, they’ll assume you’re irresponsible.
A number of companies now do a credit check when hiring, so they can see if you’ve paid loans on time previously or not.
4. You Won’t Enjoy Credit Card Rewards
You need a good credit score to get the best credit card rewards. You won’t get a good score if you’re constantly using loans to pay off your debts. You’ll miss out on many introductory offers, coupons, and rewards.
For example, if you have a credit score of 800 or more, two airline companies will offer you free miles for using their services and staying loyal to them. If your credit score isn’t good enough, you won’t get the chance to enjoy these offers.