What is one major consequence of having a low credit score?

Having a low credit score primarily results in difficulty obtaining credit and loans because lenders typically view a low score as an indicator of higher risk. Lenders assess credit scores to determine the likelihood that a borrower will repay a loan. When potential borrowers demonstrate a history of poor credit management through a low score, lenders may consider them less trustworthy and more likely to default on payments. Consequently, this leads to higher rejection rates for credit applications.

In addition, even if loans are granted to individuals with low credit scores, they may face stricter terms, such as higher interest rates or larger down payments, which further complicates their financial situation. This creates significant barriers to accessing financing for important purchases like homes or vehicles, ultimately impacting one's ability to make necessary investments for their future.