You may not realize just how much your credit score says about your financial life. This three digit number can tell anyone that looks at it how well you manage your money and how responsible you are overall. Contrary to popular belief, your credit score affects you in more ways than just when you apply for a loan.
Your Future Employment
Your future employer may check your credit just as another layer of protection when checking your references. Even though you likely won’t owe a potential employer money, your credit score can be considered an indication of your trustworthiness. If you have a large number of collections or late payments, a future employer may think twice about hiring you, especially if your position deals with money. Employers are looking for trustworthy employees that will commit to the job and work with integrity.
Your Utility and Phone Rates
Utility companies, phone service providers, and other vendors often check your credit before supplying services. If you have a low credit score, they may charge you higher rates or require a large deposit before turning your services on in an effort to offset the risk of default. This means you may pay more for the same services that someone with a higher credit score pays.
Where you Live
Your credit score directly affects what you can afford when buying or renting a home. Lenders look at your credit score when qualifying you for a loan. If you don’t have a high enough score, you may not get approved for the loan you need which means you can’t buy the home you wanted. Even if you rent, if your credit score is low, a landlord may choose another potential renter over you (on a related note, remember that services like Rent Credit Hero can help you take advantage of paying your rent on time to boost your score).
Your Love Life
Believe it or not, your credit score may cost you a relationship. Today, many people want to know their partner’s credit score or credit history before deciding to commit. While women are more likely than men to let a credit score determine their decision, both genders tend to use the number as a measure of a person’s trustworthiness. The decision on whether to combine finances with a partner, for example sharing a bank account, may be made more complicated than they already are.
Your Insurance Rates
Car insurance companies use your credit score to determine your risk of filing an insurance claim. Studies show that drivers with lower credit scores are at higher risk of getting involved in an accident. This puts the insurance company at risk of paying out on claims. Most insurance companies either charge higher premiums as a result or they deny your request for insurance altogether.
Maximizing your credit score is important for many areas of your life. If you think you don’t have to worry about how a credit score affects me, think again. It directly affects more than your loan interest rates and the ability to get approved. It also affects many other areas of your life. Take the time to know what your score is and improve it: make sure your bills are paid on time, you don't overextend your credit, and that you don’t close old accounts that you no longer use in order to have the best chances of a high credit score.