Updated on July 8, 2016
You probably are the kind of person who simply have an affinity for maxing out credit cards as well as defaulting on payments. Your ignorance probably has you thinking that such wanton behavior has no side effect on you. Chances are that you are young and feel as if you own the world or that your behavior right now won’t have an impact on your future. Well, it is time for you to smell the coffee as your financial irresponsibility now will haunt you in the future when you want a loan or even a phone contract with favorable terms. In light of this, what are the side effects of having a poor credit rating?
High interest rates on credit cards as well as loans
Having a poor credit rating means that you pose a great risk to lenders due to your history of defaults and as a result you will have to contend with high interest rates every time you apply for a loan, a credit card or even a mobile phone contract.
High rejection rate
When you have a poor credit rating, you can as well forget about guaranteed approvals when you apply for a loan. What you can be sure of is the high rejection rate from lenders because you are considered a great risk to their success.
High insurance premiums
A poor credit rating means high insurance premiums because of your history with defaults. Insurance companies that individuals with lower credit scores tend to have high claims and as such will always impose high premiums.
Security deposit for a cell phone contract required upfront
The fact that you have a poor credit rating means that it will become difficult to get approved for a phone contract without paying for security upfront. Mobile providers view you as high risk and therefore will require security upfront prior to approval.
In addition to the above, chances are also high that you will be denied for employment due to having a low credit score, you will encounter problems getting approved for an apartment, encounter problems purchasing a car not to forget incessant calls from debt collectors!