Credit ratings are very important in the UK, and this can be problematic for people who have had serious financial problems in the past, or perhaps are simply too young or inexperienced with credit to have built up a satisfactory credit score yet.
While there are some consequences of poor credit that are quite obvious, such as there being less credit products available to you if you have a bad or non-existent credit rating, it is possible to get credit products like bad credit loans and credit rating building credit cards that are specifically aimed at people in those situations. This can make a bad credit rating seem like less of a problem than it actually is, because your credit rating can be referenced for more than just credit applications.
Here are some of the less obvious ways bad credit can affect your life, which make good reasons to start boosting your credit rating as soon as you can:
A Bad Credit Rating Can Limit Where You Can Live
One of the most troubling side effects of a bad credit rating is that it can make it very hard to rent a property. Given that if you have bad credit getting a mortgage is going to be virtually impossible (unless you happen to have a lot of money available to use as a deposit at this point in time), this makes living anywhere of your own especially difficult. Most private lettings are done through lettings agents, and these almost always require you to pass a credit check before they will accept you for the property of your choice (as well as paying deposits and up front rent, and often proving your income).
If you fail credit checks you won’t be able to use this method to rent a home, and will need to consider renting from people who advertise directly as landlords or living in shared accommodation where credit checks are not done on all of the people in the house. Alternatively you may have to get your parents to guarantee your tenancy.
It Can Also Affect Employment Prospects
Another thing not a lot of people realise is that employers too, can often do credit checks before making a job offer. While this happens most often in the financial sector, it is becoming more and more common. This means that poor credit can affect your career.
A third problem when you have bad credit is getting services on a contract. Even to get a contract mobile phone you’ll need to pass a credit check, and this means that if you can’t, you’ll be limited to higher priced, less convenient things like pay as you go phones until you can improve your credit rating sufficiently, or you’ll need to have someone else like a parent or partner take responsibility for a contract for you.
These are just some of the more unexpected ways that having a poor credit rating can introduce problems in your life. There are often ways around them, but they add significant complications and often require you to have someone around like a parent who is willing to take on some of the accountability for your financial commitments.