20 Things You Can't Do With a Low Credit Score

A credit score isn't just some arbitrary number: It lets lenders, retailers, and even potential employers determine how trustworthy you are. Your credit score is your credit history, and it's a reflection of how much you spend, how quickly you pay your debts, how long you've had credit extended to you, and how many types of credit you work with. If you don't know your credit score, you can't improve your credit. Find a participating bank, credit union or credit card issuer and check your score for free — if it's bad, there are plenty of ways you'll pay for it anyway. 

Related: 14 Ways to Improve a Bad Credit Score

Subprime mortgages were the foundation of the last housing crisis, and they haven't gone away. According to LendingTree, if you have so-so credit (between 680 and 719) and take out a 30-year mortgage with the average purchase loan amount of $256,634, you'll end up paying $28,300 more in additional costs than someone with excellent credit over the 30-year span. While borrowers with the best credit could get an average interest rate of 3.72%, that jumped to 4.25% for those with lower credit scores. A subprime mortgage requires a heftier down payment and lots more interest than a standard loan, which makes it perhaps the biggest downside of bad credit.

So you have a home, still have bad credit, and you think someone is going to give you a better interest rate on your mortgage for it? There's a reason Zillow's first suggestion to homeowners looking to refinance with bad credit is to improve it: You don't have many other options. You can either shove a whole lot of liquid assets into the bank to show you have something to fall back on, get a cosigner or, if you have a Federal Housing Authority loan, get a Streamline Refinance with no credit check. 

Related: Refinancing Your Home: Should You or Shouldn't You?

Drivers with poor credit can pay double or even triple the auto insurance premium of a driver with good credit, according to a study by InsuranceQuotes.com. Poor credit scores can also more than double homeowner and renter insurance premiums; even a fair credit score will cost 36 percent more for home insurance than excellent credit. "Many consumers are unaware that their credit history is being used to not only determine whether they will be approved for a new credit card or mortgage, but also to decide how much they pay for insurance," says Nick DiUlio, an analyst at insuranceQuotes.com.

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You can get an apartment with bad credit, but you may have to increase your deposit, get a cosigner, and do a lot more paperwork than someone with better credit. A NerdWallet survey discovered that 23 percent of Americans had no idea that credit could affect their ability to get an apartment. 

Related: 13 Ways to Lower Your Rent

Bad credit? No credit? No problem ... for an auto dealership that's more than happy to take a larger down payment and a high interest rate. Banks and credit unions will likely give someone with bad credit a better deal, but that borrower may need to consider a shorter loan period or a cosigner. "If you have terrible credit (lower than 580), you might be looking at interest rates as high as 20 percent or even close to 30 percent," says Kate Williams at Consumer Affairs. "That can add up to paying thousands of dollars extra for an automobile with bad credit versus good credit." 

Related: 12 Signs The Car Dealership Is Ripping You Off

Nearly half the singles in a NerdWallet survey (48 percent) said they flat out wouldn't date someone with bad credit, with that percentage jumping to 61 percent among those making $100,000 a year or more, and 63 percent among college graduates. A full 44 percent of women say a partner's finances are more important to them than their looks.

Your credit history will have no effect on that of your spouse if you get married. But if you're merging bank accounts or applying for loans (such as a mortgage) together, a partner with bad credit history can not only sink the entire process, but can continue the bad habits that gave them bad credit in the first place. "Credit history is just that — a history," says Anthony D. Criscuolo, of Palisades Hudson Financial Group in Fort Lauderdale, Florida. "It takes time to fix a bad history, but being married to someone who is financially responsible who will always pay bills on time will help the credit score of both account owners." 

Related: 11 Secrets to Managing Money in Marriage

Roughly 49 percent of Americans have no idea bad credit can limit a person's options for phone service, NerdWallet finds. But carriers want to make sure you're going to pay your bills, and will run a credit check to protect their investment. Those with bad credit can get a prepaid phone with no credit check, but they'll pay far more upfront than someone with good credit on a standard plan. Bad credit may also require a hefty deposit on a standard plan.

The Financial Industry Regulatory Authority won't license you as a broker if you have bad credit, largely because few clients want brokers who are in financial straits themselves. In some states, even contractors need to submit to a credit check before they are licensed. If bad credit keeps you from clearing a basic hurdle to employment, how's it going to look to someone actually offering you a position? 

In 39 states and the District of Columbia, you can be denied a job because of bad credit, according to WalletHub. Roughly 47 percent of employers check some job applicants' credit, though 80 percent say they have hired despite a warning sign or two, according to the Society for Human Resource Management. While credit isn't a big factor in the job hunt, it is a factor employers might consider along with everything else you present.

Related: 38 Biggest Mistakes to Avoid at Your First 'Real' Job

Pay nothing for the first 12 months, you say? In many cases, that leads to deferred interest, which can be a steep average of 24 percent — and retroactive — once an interest-free period ends, the Consumer Finance Protection Bureau notes. That cost consumers $2 billion in 2016, up 10 percent from a year earlier. Your other options, considering credit cards present a similar credit issue, are to either pay for jewelry purchase upfront or look for a cheaper or antique option.

There are nearly eight times as many cards available to those with excellent credit compared with those with poor or bad credit, NerdWallet says. Though more than 1 in 5 Americans (21%) believe a person with a credit score above 600 will qualify for any credit card he or she wants, it's a below-average score — and those with subprime credit have no access to the cards with the best rewards, the best purchase protections, and the best travel benefits.

The national average for a credit card's annual percentage rate is 17.55 percent. The difference can mean 15.18 percent APR on a low-interest card and 24.89 percent APR on "bad credit" cards. "Subprime credit cards are the fake metal jewelry of the credit card world: They might look like the real thing, but in the end, they can end up hurting you," says Kimberly Palmer, NerdWallet's credit card expert. 

Related: 30 Worst Things About Credit Card Companies

Yep, you can finance plastic surgery just as you would a car, some jewelry, or a house. Americans spend more than $16 billion a year on these procedures, which often aren't covered by insurance. Considering that the average cost of liposuction and a tummy tuck comes out to more than $9,000, credit card and personal loans are often used to cover them. The best bet for those with bad credit, according to CreditCards.com: Either save up for a procedure or talk to a doctor about a payment plan.

Your ability to pay off a student loan certainly affects your credit score, but a credit score is often what secures that loan in the first place. The good news is that, according to the Department of Education, good credit isn't required for a federally funded student loan or subsidized Stafford and Perkins loans. Parents applying for a federal PLUS loan "must not have an adverse credit history," though. Accounts with balances greater than $2,085 that are 90 or more days delinquent or placed in collection are a problem. If, within the past five years, you've gone into default, bankruptcy, repossession, foreclosure, charged off student loan debt, had wages garnished, or had a tax lien on your property, it's going to be difficult to get loan money. 

Related: 10 Things You Need to Know About Student Loans Right Now

If you're looking to open a franchise, a parent company is going to run your credit to see if you can be trusted to pay for it. If you can't, it's going to be difficult to open that franchise without leveraging everything you have. Business loans and startup loans also require some modicum of good credit to proceed. If you lack that, your best bet is to ask family members or friends for loans or go to online microlenders for the money.

A personal loan from a bank or credit union can help you consolidate other debts and pay them off, but they also come with interest and lender fees that need to be paid. If your credit score is low and your debt-to-income ratio abysmal, you may be stuck with a high interest rate or refused a loan altogether. The latter may be preferable — the average interest rate for credit scores starting in the 600s range between 17.8 and 32 percent.

Have you ever paid a security deposit on electric service, gas service, cable service, or a phone line? Most people don't, but bad credit can change things in a hurry. As Experian explains, utility companies like to know if you've missed payments in the past or had collection agencies after you. The less turbulence in your credit score, the less likely it is you'll be asked for a deposit. 

Related: 21 Ways to Reduce Your Monthly Bills When Money Is Tight

Looking for a home equity line of credit, a personal line of credit, or even a business loan? It helps to have a credit score over 700 and a good history of repaying your debts. A line of credit isn't a loan: It's a reserve that's there for you to tap into for specific needs. A lender wants to know that you won't just raid it when the mood strikes or clean it out with no intention of repaying.

Credit history is just one of 13 elements the government considers when granting security clearance, WalletHub reports. But the Office of Personnel Management thinks financial irresponsibility may indicate greater general irresponsibility — and people in debt can often be leveraged in exchange for money. If you want higher clearance and greater responsibilities, clean it up.