If there’s one thing they should consider teaching in school is that credit is king. Sometimes more valuable than actual cash, when you have a good credit rating, the skies are the limit to what you can accomplish financially. That is, if you properly manage your finances and maintain a good credit history. The moment you fall short on one of these things and your credit drops, getting back to the top again presents a lot of challenges.
If you’re presently living with bad credit, then you know that improving it takes months and sometimes years. You have to shell out thousands of dollars to resolve outstanding debts, remove any inaccuracies, find new accounts to open, make timely payments, and keep your debt to income ratio at or below 30%. As this can take a while to raise your credit rating, figuring out how to navigate life with a poor credit score is a must. Below is a look at some of the things it may be difficult or expensive to get with bad credit and ways around it.
It’s Hard to Get Approved for Housing
Homes are expensive to afford on your own. Most people take out a mortgage to buy the property they’re interested in. If you have a credit rating of 650 or lower, the chances of you getting approved for a mortgage are slim to none.
The same goes for renting. Many property managers and landlords review your credit report to determine if you’re a reliable tenant. A credit history riddled with missed payments closed accounts, and collections can result in you getting turned away.
What to do: If you’re looking to buy a house or rent a home there are ways you can do so with poor credit. One option would be to ask someone with better credit to cosign the mortgage or lease agreement with you. Another would be to offer a higher down payment or security deposit. Lastly, consider looking for properties for rent by owner or for sale by owner as they may be a bit more lenient on eligibility requirements.
You May Not Be Able to Get a Car
Though there are plenty of ways to get around, most people still prefer to travel by car. If you were thinking of getting a car loan with poor credit, you may be surprised to find that your options are limited. There are some lenders out there willing to make you an offer, but you’ll pay more than double the cost of the vehicle in interest rates.
What to do: Instead of going for a new car, opt for a used car. You can find a decent car for a few thousand dollars and then apply for no credit check installment loans online to make the purchase. With approvals for as much as $1250, this can be a sizeable down payment on a car in the $3,000 – $5,000 range. You can also look for dealerships that offer pay as you go options where you’d pay bi-weekly or monthly to the dealer. Lastly, looking for a used car for sale by an owner can get you some affordable wheels without the need for good credit.
Good Luck Finding Certain Jobs
Here’s one you may not have been aware of, job applicants with poor credit can get overlooked for a position with certain firms. If your position would require you to manage money, for instance, a credit report showing that you can’t handle your own personal affairs would not work to your advantage. Other employers use credit reports to determine the type of employee you would be. Do you manage your finances appropriately? Are your payments timely? Is your credit portfolio diversified? These are all things they can assess from your report and use to make a final decision on whether you’re worth hiring.
What to do: If you’re having a hard time finding a job due to your financial history you may need to switch professions. Another option would be to look for side hustles or small business startups you could launch instead and work for yourself.
These aren’t the only challenges you’ll face if you’re living with poor credit. Everything from your utility services to car insurance quotes will be a lot more expensive due to added interest. The best solution, obviously, is to start working towards rebuilding your credit. However, as you wait weeks, months, and even years for your credit rating to improve, it’s good to know that you still have options.