Some people feel that credit is not very important. They might get credit cards at a young age and rack up significant debt very quickly. If you’re blasé about this, though, you might pay for it later.
Poor credit can hamper your progress as you try to get ahead in the world. We’ll talk about some of the most notable ways it can slow you down right now.
You Can’t Get Loans as Easily
You might need a loan at some point. You may require a general bank loan for no particular purpose, or at least none that you specify. Title loans for those with poor credit are possible, but they’re not so likely. If you have better credit, a bank will look at your request more favorably.
If you can’t get a loan, maybe you can’t buy the car you want. Perhaps you need that money to start a business. Without that cash, you can’t rent or buy the property you need. You can’t use that money to pay your workers, and you can’t use it to buy the raw materials to make your products.
Reckless credit card usage can put you in this position. You may work to get out from under your credit card debt and eventually get the loan you need, but it will take time, and the delay may frustrate you.
You Can’t Rent Apartments as Easily
You may decide you want to rent an apartment at some point. Perhaps you’ve lived in your parents’ home for years, and you’d like your own place. You might have a significant other, and you two want your privacy.
Maybe you’ve married your partner, or you two consider marriage often. You don’t want to stay under your parents’ roof anymore.
Renting an apartment isn’t that difficult if you have excellent credit. A high credit score and a steady job can get you out of your parents’ house and installed in your new apartment quickly.
With bad credit, though, the landlord or building owner might turn you down. Poor credit signals financial irresponsibility. That might not seem fair, but that is reality. The landlord will give away the apartment you want if they find someone who seems more responsible and has better financial habits.
You Can’t Get New Credit Cards
Maybe you want to get some new credit cards. You might have one or two, but you’d like a couple of others that come with better perks.
Some credit cards have cash-back rewards, while others have travel benefits. Those perks might appeal if you want to travel internationally one day. If you utilize just one credit card for months or years and pile up thousands of points, you might use those for flights, hotel rooms, meals while you are overseas, and so forth.
If you can’t pay off your existing credit card debt, companies likely won’t give you any new ones. Credit card companies can easily check your credit score and see how much you owe. A low score means you are a high-risk prospect, and the companies don’t like that very much. They will probably reject your card application until you can pay off your current debt and raise your score.
You Can’t Extend Your Credit Limit
You might not want any new cards. Instead, you’re planning a credit limit extension. You might want this if you need that credit for a major purchase.
Maybe you need to fix your car, and it requires some costly replacement parts. You might need to fix your roof or do something else around the house. Perhaps you want to build a deck or patio in the backyard and need the raw materials for that.
No matter what you want, if you have a poor credit score, you can’t extend your credit limit. The company will reject you until you solve the problem. You’ll either need to wait or get the money elsewhere.
You Might Not Convince Someone You’re Marriage Material
Maybe you want to marry someone. You have a significant other, and you’ve dated them for quite some time. You feel you want the next step, and you propose marriage to them.
They might feel unsure about the situation. Perhaps they say they’ll only marry you if you can prove you’re financially responsible. They like you or maybe even love you, but they’re also practical. They don’t want to move forward if you don’t have a good credit score and a nest egg.
If so, you must improve your score before you hear any wedding bells. That might sound callous, but some people value financial stability. If you can’t offer that, they may remain undecided or say no when you propose.
How to Improve Your Credit Score
Paying off your credit card debt will go a long way toward improving your score. To do that, you must embrace a frugal lifestyle for a while. You probably can’t eat out very much or buy any new clothing. You must shop at Goodwill or other second-hand stores. You can purchase bulk food and make simple meals that don’t cost very much.
You might also pay off all your other outstanding debts. If you owe back rent, you must pay that off. You can also get your credit report and make sure it’s totally accurate. Sometimes these reports have incorrect information. If that happens, you can contact the company that issued the report and dispute it.
You might also consolidate any loans you have into just one. Sometimes, you can pay off your debt easier that way. You can pay just one amount each month and not several different ones.
Your credit score matters, and you’ll soon learn that in life if you haven’t realized it yet. Try not to lower your score if you can avoid it. If you have a low score, start working and dig yourself out. You can improve your score in time if you work hard at it.