When you hear credit score, you likely think of some company pulling your credit because you’re taking out a loan, establishing a line of credit, or applying for a credit card. Well, those days are over. It’s not just about borrowing money that triggers companies to take a look at your credit history, and even you credit score.
Now, companies that are not even financial institutions, creditors, or lenders are pulling your credit and checking out your credit score.
Check out at least five of the ways your credit score can affect areas of your life that aren’t really about borrowing money.
1. Finding Your Soulmate
Yes, you read that right. Not only is your potential life partner checking out how you look in those jeans, he or she is also checking out your credit score and credit history. (Not literally, of course. Although some might ask you to pony up a copy of your credit report.)
Yes, your potential soulmate wants to know about your financial responsibility. Before your walk down the aisle, your partner wants to know about your finances because when you marry someone, you not only marry their bad habits at home and their insane (or sane) family, but you’re also marrying their finances with your finances.
According to U.S. World & News Report, nine out of 10 survey respondents say that their partner’s financial responsibility is important to them because they worry it can affect their ability to buy a home, obtain decent interest rates on loans, and responsibly manage money in their joint accounts.
Three in 10 women and two in 10 men said a poor credit score is a relationship deal breaker. It gives a whole new meaning to sprucing up your dating profile online.
2. Cost of Living
Your credit score can now directly relate to how much you pay for, well, almost anything from cell phones and landlines to insurance and utilities. Service providers of all kinds are now checking applicants’ credit scores to gauge the level of risk you represent.
Data shows that individuals with low credit scores are more likely to file an insurance claim than those with higher scores. Low credit scores can also indicate less of a likelihood to pay bills or to pay bills on time – putting the company at risk.
Some companies can deny you service altogether if your credit is not healthy, while others may require a deposit or increase your monthly payments based on a low credit score or poor credit history.
What does it mean for you? Well, I’m glad you asked. It means that you tend to pay less money (and save hundreds of dollars overall) by maintaining a high credit score (oh by the way, it is a perfectly legal practice for companies to do this).
For example, this is what your credit score can do to your mortgage rate. If this effect is applied to all of your living expenses, just imagine how much a low score could cost.
30 Year Fixed Mortgage with Excellent Credit Scores (760 or Higher)
Loan Amount: $250,000
Interest Rate: 3.052%
Monthly Payment: $1,061 (Principal and Interest Only)
Total Interest Paid: $131,972
30 Year Fixed Mortgage with Fair Credit Scores (620 – 639)
Loan Amount: $250,000
Interest Rate: 4.616%
Monthly Payment: $1,284 (Principal and Interest Only)
Total Interest Paid: $212,241
Extra Interest Paid (Versus Interest Expected at a 760+ Credit Score): $80,269
3. Landing a Job
Before you apply for that next big dream job, consider your credit history, not score. Employers can legally (on most states) run credit checks as part of the pre-employment screening process. Employers can take a peek at your credit history, but they cannot see your actual credit score.
Generally, employers run credit checks for those applying for positions that are responsible for money management or in financial positions in an effort to reduce, mismanagement of funds, embezzlement, and other criminal activity.
According to Society for Human Resource Management (SHRM), the practice of pulling credit reports is on the decline. Before a potential or current employer can check your credit, you have to sign a consent, so it’s all on the up and up, and you’ll know about it before it happens.
4. Living High on the Hog
Landlords frequently check credit reports before renting a home or an apartment out to tenants. In fact, according to Rentpath.com, your credit score is the second most important factor a landlord considers when renting a residence.
And while tenants are unlikely to pay higher rents, if they have a low score, they are less likely to be approved to rent in the first place. Some landlords increase the deposit amount they require from tenants with bad credit as to hedge the risk of the tenant not paying their rent or skipping out with a damaged residence.
(When I was a landlord, I rented to a couple with a questionable credit history. I collected two months in rent as a deposit, in addition to them paying the first and last month’s rent ahead of time, so as to reduce my risk just a little bit.)
A good credit score versus a bad credit score can literally affect the way you live and where you live.
5. Credit Cards with Rewards
Sure, you have to have a good credit score to land a credit card to begin with, but that’s not all. If you expect to land credit cards that keep on giving, such as rewards cards or cards where you can rack up miles for air travel, then a good credit score is a must.
Everyday spending using your credit card (that you pay off each month of course) can change the way you live your life. It can mean cashing in miles to take exotic vacations or cashing in those points for a new Smart TV all because you used a rewards card to pay for your everyday expenses like gas, food, and catching the latest flick at the theater.
While you may hear credit score or credit report and think only about borrowing money or financing something, that isn’t the world we live in today. The reach of credit scores and credit history go way beyond landing a steal-of-a-deal interest rate on your next loan. Having good credit can change the way you live your daily personal, professional, and financial life.
In what unusual way has your credit affected your life? Share with us below!