Low wages, a shortage of full-time jobs, skyrocketing living expenses and a range of other factors have all made living in America a financial struggle for millions of people. Such complications lead many to go into debt, and debt can damage your credit if you accumulate too much. The cycle never seems to end, and, needless to say, you are not alone if you have wound up with a less-than-ideal credit score as a result.
According to CNBC, scores that fall in the range of 300 to 649 are generally considered poor. Your credit score is calculated based on a variety of factors, and your score has an impact on many aspects of your life. Consider the following three consequences of having poor credit as well as your potential options for debt relief:
1. High interest rates
One of the first consequences of bad credit you will likely see is a spike in the interest rates that you are eligible for. This is assuming you are still eligible for loans to begin with—many lenders will automatically deny applicants whose scores fall below a specified threshold. If you are approved, you are likely to pay a much higher interest rate than applicants with a higher score.
2. Fewer housing options
You will also notice that a low credit score likely limits the options you have for housing. It is common for landlords and property managers to request personal information from you so that they can retrieve a copy of your credit report. If it reveals a low score, they may feel that it is too risky to rent to you and deny your application. This significantly limits your options for finding an apartment or home.
3. Employment discrimination
You may be surprised to learn that it is typically legal for a potential employer to request a copy of your credit report and make a hiring decision based on the information found. Though this is not necessarily a common practice, it means that an employer could discriminate against hiring you based on your credit score.