Why a Poor Credit Score Reduces your Savings

Do you know that a poor credit score has a direct effect on your savings? Credit score is usually used by lenders to determine if you are a
good candidate to extend credit to. Having a poor credit score actually means that you are unable to pay your debts on time or you are not consistent with your repayment. Lenders don’t like borrowers who have poor credit score and they will do everything within their power to ensure that they don’t lend them money. In this article, we are going to give you reasons why a poor credit score Reduces your Savings

Getting proved for a loan can be difficult

As said earlier, lender don’t like borrowers who have poor credit score. This means that if you have a poor credit score, then your chances of getting a loan are very low. This has a direct effect on your savings. For instance, if you wanted to get a loan in order to buy a home, your wish won’t be granted because of poor credit score. The only option that you will have is to use all your savings, a factor that will leave you bankrupt.

Higher interest rates and more restrictive terms

If you have poor credit score, financial institutions will know that you are not consistent with loan repayment. As a result, if you want
a loan then you will have to get it at higher interest rates and more restrictive terms. The fact that you will have to pay your loans at high interest rates means that you will have little to save.

Trouble getting a job

Recent reports have revealed that most employers nowadays are keen to check the credit score of interested applicant before they consider to hire him/her. Most employers think that individuals who have poor credit score are not productive when compared to people with good credit score. Having limited employment opportunities will have a direct effect on your savings because you won’t be able to save because
of lack of regular income.

Higher insurance premiums

A report revealed by the national association of insurance commissioners revealed that 85% of home owners and 95% of auto car insurance actually factor in poor credit score in their policy in states that don’t forbid this practice. This means that if you don’t make timely repayment, you will pay higher insurance premiums than a person who has better credit score. This will impact directly on your saving because you will be forced to dig deeper in your pocket in order to sustain your high cost of living.

If your score is hovering around the 650 range, view information on that by visiting https://www.is650agoodcreditscore.com.