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What are the Disadvantages of having a Bad Credit Score?

A poor credit score might have far more serious effects than you would imagine. So, what exactly is the big deal with a bad credit score? Before making a decision, numerous institutions from loan officers to corporations to insurance firms – check at your credit history. You could find yourself in a situation where you can't receive a loan, get a job, or even find a place to live because of your poor credit score. Here are six negative consequences of bad credit.

  • It's possible that your loan applications will be rejected.

Borrowers with bad credit are seen as a high risk by lenders and creditors, therefore they will be less likely to offer you the money you need. Your loan applications may be declined, whether you're seeking for a mortgage to buy a home or a loan to finance a new car.

  • It Will Be More Difficult to Get Approved for an Apartment

Potential tenants' credit histories are checked by landlords as well. If you have bad credit, the landlord may be less likely to grant a lease, preferring instead to sign it over to a tenant with strong credit. Landlords, like insurance companies and banks, assume that persons with bad credit are more likely to miss monthly payments, putting them in a worse financial situation.

  • You'll have to pay a lot of money in interest.

If you are approved for a loan, you will almost certainly be saddled with a very high interest rate. Because lenders consider people with bad credit to be hazardous, they'll make you pay for it by tying your loan to an exorbitant interest rate. The greater your loan's interest rate, the more you'll pay in interest rather than principle throughout the course of the loan.

  • Insurance premiums will be higher for you

Even insurance companies run credit checks on their customers. Poor credit ratings, they believe, are linked to an increase in the number of claims made. As a result of this notion, insurance companies look into a person's credit history. No matter how many claims you've filed, if they discover you have a poor credit score, you'll almost certainly be charged a higher rate.

  • You Might Have a Difficult Time Finding Work

Many occupations, particularly those in senior management or the financial industry, have certain requirements that applicants must achieve, including having a good credit score. Because of your terrible credit history, it may be more difficult for you to get the job you desire, especially if you owe large sums of money or have a history of bankruptcy.

  • It Can Be Difficult to Start Your Own Business.

With a low credit score, not only will obtaining a job be more difficult, but even starting your own business may be challenging. To get started, many new enterprises require the support of a bank loan. Banks are less likely to approve your loan application if you have a low credit score, even if your business idea is fantastic.

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