by Stacy Francis, CFP®, CDFA
I spent the afternoon shopping with a friend, and received no less than six credit card offers from well-meaning sales reps. Back home, three more waited for me in my mailbox. Frankly, it is no wonder that a large number of Americans have so many credit cards, you could use them for a round of Texas Hold ‘em. The problem is, not only do these cards tempt you to overspend – every time you apply for a new card, your credit score goes down. This can affect your finances in many more ways than you would think. Below are just a few.
- The lower your credit score, the more expensive it is to finance anything – from your dream home to that sweet new car. When you have a low credit score, banks and similar institutions consider you a high-risk individual, so if you want a mortgage, be prepared to pay for it.
- A low credit score can make it expensive at best, impossible at worst, for you to get a loan, should disaster strike.
- Many landlords will only lease their apartments or houses to people in good to excellent credit standing.
- You may need to put down a deposit – lock your money up without earning any interest – even for things as ordinary as, say, cell phone service.
- Your credit score may cost you that job you want -- most notably any type of position where you work with money, be it in a bank or another type of financial institution.
I love discounts. Who doesn’t? But if you care about your financial future, it is better to shop on sale than to open three dozen store credit cards.
Stacy Francis, Savvy Ladies