By Jonathan Roisman, NextAdvisor.com
It's been said many times that having a low credit score can hurt your finances. From being denied a credit card to receiving a high-interest rate on an auto loan, poor credit will hurt you. In addition to the recognizable consequences, there are a few lesser known, but still hazardous, effects bad credit can have on you. Here are some of these surprising effects:
1. Job hunting. While it's true that only a fraction of employers run credit checks on all prospective new employees for a particular job, poor credit can hurt your chances of landing it. Considering a handful of states restrict employer-run credit checks to varying degrees, you will be asked to sign a release in order for the company to pull your credit history.
It's best to know what your credit report looks like going in so you can be prepared for possible questions. If there are mistakes on your report, make sure to clear them up with the creditor that made the error and ask them to report their mistake to the three major credit bureaus -- Equifax, Experian and TransUnion. Having a bad credit score won't necessarily make or break your pursuit of a job, but it's good to know about any possible problems to remedy them.
2. Paying utilities. Believe it or not, utility companies care about your credit history, too. A utility company might require you to put down a cash deposit or provide a letter of guarantee to be eligible for the service. A letter of guarantee is a promise someone else will agree to pay your bill if you don't. It's not the easiest way to get water or electricity, but sometimes it's the only option.
3. Getting a cell phone. Like with utility companies, a cell phone provider might require you to put down a deposit to secure service. You might also miss out on special rates and promotions if you have a not-so-perfect credit score. The selection of phones can be limited to pay-as-you-go models if you can't afford a deposit or find a cosigner for the contract.
4. Applying for car insurance. It's a given that a bad credit score will hurt when applying for a car loan. You'll have to pay a higher APR on it, which means you may end up paying thousands more dollars than someone else with a good credit score on the very same vehicle.
But even your car insurance rates can be adversely affected because of poor credit. Some companies base their premiums on your credit score when you apply for insurance. Companies justify this by saying lower credit scores correlate to more claims being filed. Whether it's fair or not, your credit history can have a big impact on attaining affordable auto insurance rates.
5. Elective medical procedures. To be clear, mandatory treatment will never be denied. Elective procedures that aren't covered by your insurance, however, such as laser eye surgery and certain plastic surgery, will require payment upfront if the doctor's office determines you can't afford to pay the monthly installments. And how is that determined? You guessed it: based on your credit score.
6. Starting your own business. If you thought getting a favorable car loan was daunting with bad credit, be prepared to be turned away for small business loans. Even a great idea with a sound business model might not be enough to get off the ground if you're in need of a loan to do it. If you do get approved for a small business loan, you'll probably have a high interest rate and might have to put up a lot of collateral in exchange for the funding.
