What is typically a consequence of having a low credit score?

Having a low credit score typically leads to higher interest rates on loans and credit cards. This is because lenders view a low credit score as an indicator of higher risk; they believe that individuals with lower scores are more likely to default on payments. As a result, lenders compensate for this perceived risk by charging higher interest rates when offering loans or credit products. This means that borrowers with low credit scores end up paying more over time due to the elevated costs of borrowing.

In contrast, guaranteed approval for all loan applications, access to premium financial products, and lower insurance premiums are generally associated with higher credit scores, not low ones. These benefits arise from a demonstrated ability to manage credit responsibly, which is reflected in a solid credit history. Therefore, the connection between a low credit score and higher borrowing costs is a fundamental consequence of how lenders assess creditworthiness.