What Does Bad Credit Affect? Consequences of Having Bad Credit

What you may not realize while you ignore your bills and max out your credit cards are that your credit score gets severely affected. The amount of debt you carry along with the timeliness of the payment of your cards also majorly affect your score.

So, what does bad credit affect? In a nutshell, your whole life.

What Does Bad Credit Affect

What Does Bad Credit Affect?

Having a bad credit score has a major impact on your life. Below, we will list some of the most common drawbacks of having a bad credit score.

  • Loan Approval

A bad credit score will directly affect the likelihood of you securing approval for a credit application or a new loan. The lower your credit score is, the chances of you finding a willing lender are also low. Lenders do not make loans to people whom they believe fall below a particular quality level.

To further reiterate how important your credit score is, two people with credit scores of 698 and 703 may not sound much different. However, if 700 is an important level, then even these five points make a massive difference.

  • Higher Interest Rates

Even if you do manage to get your loan approved with a low credit score, the rate of interest at which your loan is going to be approved will make it a whole different problem. Furthermore, having a low credit score will also mean that there will be some restrictive terms on your loan.

An interest rate with a single percent difference is capable of adding additional thousands of dollars to the total cost of the mortgage. It depends on how your loan is structured though.  This principle applies to every kind of loans, such as auto loan, personal loan, credit cards, and home loans.

  • Trouble with Security Clearance or Getting a Job

There isn’t much of a correlation between an employee’s credit and their job performance. However, that does not stop employers from checking their prospective employees’ credit during the hiring process. This especially applies to the job in the upper management or in the finance sector.

In such jobs, it is imperative to have a decent credit history. High debt amounts, outstanding bills, and bankruptcy are factors that leave you turned down for a job.

  • Security Deposits on Utilities

Utility companies, such as cable, electricity, and cellular service, check your credit. This is a part of the application process. With a credit history, you may likely end up paying a higher security deposit even if you always pay your bills on time. This security deposit is charged upfront even before you establish the service.

  • Getting Approved for an Apartment

A decent credit score is a prerequisite for most landlords looking for people to rent their place. A bad credit score makes renting an apartment extremely difficult. Even if you do find a landlord willing to rent out his or her place to you with low credit, be prepared to pay a significantly higher security deposit.


What does bad credit affect? The ones we have mentioned are just a few of several things that get affected with bad credit, which is why it is important not to have a low credit score or at least begin raising it.

James Willaims

Hey There, James here. I am the co-founder and editor of this site. I have over 10 years experience in business and 5 in the credit repair world