5 Things That Are Harder with a Bad Credit Score

Your credit score is one of those “invisible” forces that can have a surprisingly large effect on your life — even if it only comes into play sporadically. You’re probably most aware of your credit rating when you go to apply for something because the people evaluating your application might factor it into their decision whether to approve or deny your submission.

While your credit score may not seem to affect much on a day-to-day basis, it’s important to be aware of the consequences of having a subprime rating. You can then use these as motivation to work on building your credit score over time.

5 Things That Are Harder with a Bad Credit Score

Here are five things that are harder to do with a bad credit score. 

Renting an Apartment

Trying to secure an apartment lease can already be a stressful experience, especially for those living in areas with competitive or expensive housing markets. A poor credit score can make the process that much more frustrating. Most landlords perform credit checks on applicants — and some even require applicants to meet or exceed a certain score to be eligible for a certain unit.

One Bay Area property manager uses a tenant screening service to run background and credit checks on applicants. She looks for people who have a FICO score of at least 600 and even higher scores for upscale listings.

A lower credit score can make it harder to convince landlords and property managers you’re a worthwhile risk as a tenant. As a result, you may have a more difficult time securing a lease. 

Getting Approved for a Loan

People take out loans for various reasons — like consolidation loans to pay off debts and mortgages to buy property. As you can imagine, getting approved for a loan is trickier with a lower credit score because you appear less trustworthy to lenders.

Of course, in many cases it is still possible to secure loans with bad credit. The trade-off is often higher interest rates. In other words, it’s more expensive to borrow money with a lower credit score — even if you can get approved. You may need to add a co-signer to make your application stronger. 

Opening a Credit Card

A wide range of credit cards is available today with all kinds of perks and terms. People whose credit scores are currently low may have a difficult time qualifying for cards with premium rewards and competitive interest rates.

Still, it’s usually possible to open a new line of credit with a low credit score, again though, you’ll likely face higher interest rates. 

Paying Your Phone & Utility Bills

Certain bills cost more if your credit score is low.

Say you’re moving into a new apartment and need to get your electric, water and gas utilities set up. You reach out to the respective services in your area and make a request to turn service on starting on the day you move in. You’re surprised to find you have to pay a deposit in order to secure these services. What gives?

As the Federal Trade Commission notes, utility companies often look at credit history — especially your record of paying past utility bills — when setting up services. People with a spotty payment history or low credit may have to pay a deposit to get service started.

Some services like cell phone plans, internet and cable may also be more expensive for consumers with low credit. 

Paying Your Insurance Premiums

Poor credit can make paying your insurance premiums more of a hassle too. In fact, policyholders with low credit scores can end up paying hundreds or even thousands of dollars more per year than those with good credit.

Long story short, a bad credit score makes it harder to get loans, apartments and utilities— and it makes it more expensive too.