In EverFi's financial literacy courses, one common consequence of falling behind on loan payments is the potential damage to your credit score. When you miss loan payments or make late payments, it can negatively impact your credit history and lower your credit score. This can have several repercussions, including:
Limited Access to Credit: If you have a history of missed or late payments, lenders may be less willing to extend credit to you in the future. This can make it more challenging to qualify for loans, credit cards, or other forms of credit.
Higher Interest Rates: Even if you can still qualify for credit with a lower credit score, you may be offered less favorable terms, such as higher interest rates or fees. This can increase the cost of borrowing and make it more expensive to repay loans.
Difficulty Renting Housing: Landlords often check prospective tenants' credit reports as part of the rental application process. A poor credit history could make it harder to rent an apartment or house, as landlords may view you as a higher risk tenant.
Employment Opportunities: Some employers conduct credit checks as part of the hiring process, particularly for positions that involve financial responsibilities or access to sensitive information. A negative credit history could potentially impact your job prospects, although this practice is becoming less common in some industries.
Insurance Premiums: Insurance companies sometimes use credit scores to determine insurance premiums. A lower credit score could result in higher premiums for auto insurance, homeowner's insurance, or other types of insurance coverage.
It's important to prioritize making on-time payments on your loans to avoid these negative consequences and protect your financial well-being. If you're struggling to make payments, consider reaching out to your lender to discuss potential options for repayment assistance or modification. Additionally, EverFi's courses may offer guidance on managing debt and maintaining good credit habits to help you navigate these challenges effectively.