Your credit score may just be a number, but it’s a big number. Most people don’t necessarily watch their score like the proverbial hawk – which is generally OK, as long as you’re keeping tabs on it regularly during the year and in advance of major financial decisions. But what if your credit score does start to slip a little bit without you noticing? What are some of the ways that a declining credit score can affect your day to day life?
1. Interest Starts To Pile Up
The interest rate you have to pay on financial obligations like loans, mortgages, car payments, credit card bills, and so forth almost always scales with your credit score. A lower score means you might be at a greater risk to default (not pay back) what you owe: as such, the credit issuer decides that you will not qualify for a lower rate until you can prove that you are as reliable as possible. Considering the way that interest “snowballs” to have an increasingly more damaging effect on your finances, this is one of the best reasons to try to keep your score high. The financial planning and saving efforts you take to improve your score now might end up saving you a whole lot of money in interest later on
2. Trouble With the Landlord
The increasing pressure on renters to find affordable housing is not made any easier by lower than average credit scores. Landlords can now afford to be more choosy about who they think is going to be able to pay rent on time and keep abreast of their obligations. A prospective landlord will most likely run a credit score check – and, if you are approved to rent, your security deposit might be higher if your credit score is lower.
3. Collectors Come Calling
Anyone who has owed a debt that goes all the way to collections knows the pain of being called up – over and over – by collections agents looking to recoup the value of their assets. Though there are pieces of legislation that limit the lengths debt collectors can go to get you to pay up – prohibiting things like harassment and intimidation – getting the calls to stop can be a painful process. We have helped tens of thousands of Canadians improve their financial health by paying off outstanding collections items, improving their credit and getting them back to living their life. Learn more here!
4. It Might Hurt Your Job Prospects
Certain jobs require you to have a good credit history. You can actually be turned down for a job because of negative items on your credit report, especially high debt amounts, bankruptcy, or outstanding bills. Note that employers check your credit report and not your credit score. They’re not necessarily checking for bad credit, but for items that could affect your job performance.
5. Your Business Could Be Cash-Strapped
The small business marketplace is booming, but new businesses need bank loans to help fund their early stage operations. A bad credit history can limit the amount you’re able to borrow to start a new business, even if you have a solid business plan and data supporting your business success. Progressa’s sister firm, Merchant Advance Capital, was created to help these kinds of borrowers!
These are just a few of the negative consequences of letting your credit score dip. Changes to your spending patterns, lifestyle choices and personal routines as a result of lower credit can destabilize your day to day – making it a priority to get your score back on track if you notice that all of a sudden money related stress is really starting to hit you hard. Fortunately there are many ways to recover from a credit score slump, plenty of which we have outlined in some of our other blogs! Take a look today – if not to give your score a boost, then to learn how to guard against the bad habits that might make it slip in the future.