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Having a poor credit score means that you are a riskier borrower when compared to someone with a better credit score. It reveals that as a consumer you cannot handle new credit as they might be overwhelmed by the current debt that they have. In this respect, a poor credit score would mean that lenders are highly unlikely to extend new credit to you. Having a poor credit score can lead to several risks and disadvantages, including:

  1. Higher Interest Rates: A consumer with a high credit risk rating implies that lenders are likely to charge that consumer a higher interest rate for new credit. Lenders often charge higher interest rates to individuals with lower credit scores. This means loans and credit card balances become more expensive over time.

  2. Loan and Credit Denials: A poor credit score can lead to rejections when applying for loans, credit cards, or lines of credit. This can make it challenging to manage financial emergencies or take advantage of financial opportunities.

  3. Difficulty Renting Homes: Many landlords conduct credit checks before leasing. A low credit score can result in rental application rejections, limiting housing options. If the credit score is poor, one might have trouble finding a place to rent

  4. Higher Insurance Premiums: Some insurance companies use credit scores to determine premiums. A lower score could lead to higher auto or home insurance costs.

  5. Security Deposits: Utilities and service providers may require higher security deposits from customers with poor credit scores.

  6. Employment Challenges: Certain jobs, particularly in finance or government, may require credit checks. A poor credit score can potentially limit employment opportunities or promotions.

  7. Limited Access to Financial Products: Poor credit can limit access to financial products like personal loans, credit cards with rewards, or low interest rates, impacting your ability to manage finances effectively.

  8. Stress and Emotional Impact: Dealing with a poor credit score can be stressful, leading to anxiety and a sense of financial insecurity.

Knowing and understanding your credit status is vital, especially if you are going to be applying for any kind of finance in the future. Debt Sage can pull your credit report and you’ll get an in-depth view of how much debt you have and assess your creditworthiness.

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