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4 Ways a Fair Credit Score Could Cost You

Dec. 30, 2014
Credit Score
4 Ways a Fair Credit Score Could Cost You
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Having a fair credit score in the 630 to 689 range can be incredibly frustrating. Although you’ll probably qualify for loans and credit cards, the lowest interest rates and best credit card deals will continue to elude you. What’s more, having an average credit score can actually cost you money. If you want to improve your score, but lack the motivation to do so, take a look at these four ways that your fair credit score is hurting you.

Loans with bad rates

In the eyes of lenders, having a credit score below 700 means you haven’t quite established yourself as a reliable borrower. Either you’ve missed payments in the past or you simply haven’t had enough experience managing multiple lines of credit. Although you’ll probably be offered a loan, the rates won’t be great. This can become especially costly when applying for a mortgage, since these are loans that last several decades. Getting the best rates possible on a mortgage will save you tens of thousands of dollars over the years.

Limited access to the best credit card deals

Without a credit score over 700, it’ll be almost impossible to qualify for the best credit card deals. Although you can get by just fine with a middle-of-the-road card, you won’t have access to some of the best rewards and perks, nor will you benefit from good interest rates. From helping you save money on travel to offering cash back on purchases, the best credit cards double as huge money-savers.

Expensive security deposits on apartments

When you apply for an apartment, the landlord may take a look at your credit history to lessen any anxiety they may have about getting your rent on time. If you don’t have great credit, the landlord could increase your security deposit or ask for a cosigner on the lease. He or she may even pass up on you altogether if another applicant has a better credit score than you. In competitive housing markets, this will lead to an incredibly stressful apartment hunt.

Pricey car insurance

Car insurance companies, like landlords, look at your credit report to determine how risky of a customer you might be. Unless you live in California, Hawaii or Massachusetts, where the practice has been prohibited, car insurance companies may do this to help them determine whether you’ll cost them money. The better your credit score, the lower your rates on car insurance.

Final thoughts

With the new year just around the corner, there’s no better time than now to make a resolution to improve your credit score. From better deals on credit cards to more affordable insurance rates, bumping your score up to 700 and keeping it above that mark will save you lots of money down the road.

Image via iStock.