Having bad credit generally means creditors and lenders think you’re a risky borrower. The credit mistakes that led to your bad credit hint that you may not repay money you borrow.

Many companies use your credit history to decide whether to do business with you. And because of that, having bad credit can affect your life in more ways than you might realize.

You don’t know whether you’re going to be approved.

Putting applications when you have bad credit can be nerve-wracking. Every time you have to make an application for credit, you’re on edge, dripping sweat, wondering what the decision will be and what you’re going to do if you’re denied.

As you wait for the decision, you cross your fingers hoping that maybe this company doesn’t have strict credit requirements. Maybe your credit has improved a little since you last checked. Maybe this company will be lenient.

It’s a scary feeling, not knowing whether you’re going to be approved for denied and one of the worst things about having bad credit.

You applications might be denied.

The anticipation is bad enough, but actually hearing that your application was denied is worse.

It can be embarrassing if you’ve applied in person, because now someone else knows you have bad credit. Are they silently judging you?

Perhaps the worst thing about being denied is that it reminds you of how much the terrible shape of your credit is hurting your life.

Depending on what you’re applying for, you’ll have to look for an alternate solution. That might mean a bigger down payment, an alternate source of funding, a cosigner, or simply going without.

You may be charged a higher price when you are approved.

On the slightly bright side, having bad credit doesn’t mean your applications will always be denied. You can be approved with bad credit, but when you are, it typically comes at an additional cost.

For example, the credit cards or loans you’re approved for will have higher interest rates, which can often mean higher monthly costs.

You could have trouble finding a place to live.

Credit is an important part of the rental application process; landlords want to be certain you’ll pay you rent on time and won’t skip out on the lease before it expires.

If you have bad credit, you’ll have a difficult time finding a new place to live. This can happen even when you make more than enough money to afford the apartment.

Finding landlords who will rent to you despite you having bad credit is tough. You may have to be willing to pay more money upfront to be approved – a higher security deposit or even a few months of rent.

Not having a credit card.

Not only is a credit card an important piece of building your credit, it’s also necessary for many transactions.

For example, renting a car or booking a hotel are much easier with a credit card. Some car rental companies charge a higher deposit and do a credit check if you’re trying to rent with a debit card. And some will refuse to rent to you if you have a prepaid card or no type of electronic payment method at all.

Needing to get a cosigner.

Sometimes the only option you have for getting approved for a loan or for an apartment is to have someone cosign for you.

Finding a cosigner can be just as tough. It has to be someone that does have the credit and income to qualify. Plus, this person has to be willing to cosign for you.

You’ll have to explain the situation to them, perhaps disclose the details of your finances and your credit, and ask them to cosign for you. Unfortunately, if they turn you down, you’re back to the drawing board.

Having to pay security deposits.

Many utility services charge security deposits to applicants who don’t have good credit. The upfront security deposit must be paid before services can be established.

The deposit will eventually be refunded to you or credited to your account as long as you make all your payments on time or close your account in good standing. But, the upfront cost can make it difficult to get new cell phone service or to have utility services turned on at your new residence.

Paying higher insurance rates.

Auto insurance companies have found some link between credit and the likelihood of making a claim. This means that people with bad credit will have to pay higher insurance rates than those without had credit.

A higher cost of insurance makes it more expensive to maintain your lifestyle.

Putting your dreams on hold.

Your credit plays a major role in what you can accomplish in life. If you need funding to start a new business, you’ll need good credit. Borrowing money to further your education may require you to have good credit. You’ll definitely need good credit to finance your dream home or purchase the car you really want.

As shallow as it may sound, there are even people who date based on credit scores. Bad credit could keep you from a great relationship or even marriage.

Wondering whether a new employer will hire you.

Some employers check credit as part of the hiring process. Depending on the position and your credit history, the employer may not hire you.

Note that prospective employers check credit reports and not credit scores. They’re not necessarily checking to see if you have bad credit. Instead, they’re checking to see if they’re something on your credit report that could interfere with your job.

For example, a past bankruptcy could prevent you from being hired for some financial or executive positions.

An employment credit check won’t come as a surprise. The employer is required to get your permission before pulling your credit report. This will give you a chance to explain your bad credit and perhaps gauge whether it will stand in the way of you getting the job.

You can still live well with bad credit, but knowing that some things will be more difficult well help you prepare for navigating situations that require a credit check.

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