You may think that having a low credit score doesn’t matter if you know people with poor credit. They might own a house or a car and appear to be doing well. Low credit scores can have devastating consequences, regardless of whether you agree with their importance. These are six things you might find more difficult with a low credit score but the most important thing is the annual percentage rate or APR.

Buying a House

You can get a mortgage even if you have less than perfect credit. You may not be able to qualify for a mortgage loan if your credit score is below 620. However, this doesn’t guarantee that you will get the best deal.

While you might be able to get your foot in front of the door, you will also face a higher interest. The monthly cost of your mortgage will be higher the higher the rate. If your income is low enough to qualify for a loan amount, this is not the best news.

The lender may add interest to the equation and decide that the mortgage payment is not too high for you. Bad credit is simply a higher rate of interest, which can have a negative effect on your purchasing power. You can still buy a house with poor credit but it will cost you more and you may not get the house you want.

Apartment renting

For those who are unable to get a mortgage loan, renting is a viable alternative. It is becoming increasingly difficult to rent with a low credit score due to the tightening credit requirements of private landlords and management firms. Bad credit applicants might be shocked to learn that applying for apartments is easy if they have a steady income and a track record of renting.

Many landlords conduct credit checks on potential tenants. Although credit is not always the deciding factor in a rental agreement, low credit scores can lead to landlords making the wrong decision.

Some landlords will accept a larger deposit, but that all depends on the landlord’s willingness to take the risk. Low-score applicants may have more luck with a cosigner who will guarantee rent payments.

Other types of loans

A variety of loans will not be available to you if you have a low credit score, except for federal student loans that don’t require you to have a high credit score. Lenders won’t take chances on someone who is late or skips payments. They can’t be blamed.

The risk of a loan is taken by banks, so there’s always the chance that the applicant will not pay. The risk is not as great if a potential borrower has excellent credit and pays all bills on time.

You don’t have to have a poor credit score to get a loan. You might need to contact several lenders before you can find the right loan. Also, the terms of the loan offer you get may not be the best. A person with excellent credit could pay twice the amount you would.

Contracting for a cell phone

Some people are not able to walk into Sprint and Verizon and get a contract for a cell phone. Cell phone providers, like banks, must minimize risk. This is why they conduct credit checks on potential customers. They don’t want customers who keep racking up high phone bills and not paying their bills.

You have very little chance of being approved for a traditional phone contract if you have bad credit. If you are able to get a contract, the provider might ask for a deposit. This can vary depending on which company you work for and your credit score.

All hope is not lost. There’s always an option to pay-as you-go for your cell phone plan. However, a contract is not required to purchase phones at subsidized rates. This could lead to iPhones costing upwards of $650.

Married life

If you are a good credit person and your future spouse is bad credit, it might be worth setting some ground rules.

The person responsible for any debts you have accumulated before marriage is not their responsibility. However, he or she might not be responsible for any debt you accumulated before marriage. Your bad credit habits could have a negative impact on your financial future.

You may decide, like most couples, to purchase a house or car. Don’t expect lenders or mortgage brokers to approve you if one of your credit scores is higher than the other. Instead, they will take the average of both scores. If you have a credit score of 800 and 500, this is a median score at 650. This is not high enough to qualify for prime rate.

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