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!
I keep being turned down for credit, and the reason given is (1) too many inquiries: I have not authorized ANY inquiries, and do not recognize the companies listed in my reports from equifax et al. and (2) too high ratio of credit usage: because I hold a courtesy card on my daughters department store account and despite the fact that she is never late with payments. It was opened over a year when she became ill and requested the courtesy card… and I do not charge against it. How unfair is this!
I believe having a great credit score is necessary to buying a home with a great interest rate, but I don’t believe in using credit cards for daily living expenses. I prefer cash, it helps me stay on track with my budget. I have 3 credit cards with total credit lines of 44,000. I have one small balance left on my discover card, but once it’s paid off I will only use credit cards once a year to keep them open. I have a MMA for my emergency savings with a balance of $2500, and I continue to contribute monthly until I reach my goal of $14,000, which I can use in emergencies. I don’t think the rewards are that great to be using credit cards for daily expenses. If I want to go on vacation or fly I save my money and pay cash!!! These practices have been doing me good as all my scores are above 720 and continue to rise as I pay down revolving credit card debt. My mission is to be debt free and NEVER be in debt again!
Hello, I have been rebuilding my credit for almost 3 years and it is paying off in a positive way. My scores are in the 600’s and my payment history with bills have been excellent. I recently lost my husband to pancreatic cancer in September. Amazingly, I have not been sidetracked with my payment history and I consider this a blessing. I paid off a car much early than expected in September last year and now I am in the process of paying off my new car now. I know that as long as I remain firm and not allow people who don’t want to fix their credit issues to mess with my credit I will be fine. Thank you for allowing me to share.
I am 67 years old with a credit score around 660. I have had a checking account w/ debit card from B. O. A. for 6 + years, no fees because S. S. is direct deposited. In Jan. they 0ffered me a pre- paid platinum cash back credit card, $39.00 a year and $95.00 deposit for $500.00 credit, $200.00 cash advance. I use it for most purchases, esp. gas, and have already enough cash back to pay the annual fee. Also they occasionally offer special cash back deals at retailers I deal with which has saved me even more money. I keep track of my balances and transfer funds from checking right away. I think this is a great way to go that is helping rebuild my credit and will eventually lead to a fee free credit card.
That’s great that you have been able to build your credit by maintaining good spending habits. It just goes to show you that credit can work in your favor if you use it responsibly. How many points has your score gone up since you have been using this card?
is there anything that can get a report off my record from a bank after the bank has sold the debt to another company? On the other company they called and said they were taking me to court over the bill or I could settle for a lesser amount, but the account still shows up from the bank. Also how long does a charge off remain on your report? I am pretty sure that some of the charge offs have been sold to other collectors and I was given the option by the other company to pay a lesser amount which I did. I have paid on time since 2010 on my other debts but I still have a score or 659, which has gone up 7 points in the last month. I know I can pay my cards down and it will jump up another 20 points but I want it fixed so it does not go down below an acceptable level just because I use my credit cards. My goals is to have my number at 700 before July. Also do you have to ask for the credit bureau to take reports older than 7 years off your record or do they do that automatically, because I have one from 2005. Thanks
That’s great that you have a solid goal to raise your credit score to 700. Making the decision to tackle the problem is usually the hardest step for people to take, so give yourself a pat on the back for getting this far.
With regards to your charge-offs, you are still obligated to pay them even though they have been sold to collection agencies. Charge-offs remain on your report for 7 years plus 180 days from the first date of nonpayment. If you are unsure of which company you need to pay, contact the original creditor and ask them who your account was sold to.
Most debts should only stay on your report for 7 years, and although they should be automatically removed, many times they remain due to some error on the credit bureaus’ part. They are constantly compiling information for millions of people, and mistakes happen. You can request the removal in writing and provide any documentation that supports your claim. You can find the credit bureau addresses here: https://thecreditsolutionprogram.com/staging/credit-bureau-addresses/
Someone used my name in enrolling in a school program w/c cost $1,500 from an out of state. I don’t know how they got my info. When i check my credit score. It was already in a collection company it was almost 8 yrs still its in my credit history. What shall i do.
If this account was opened fraudulently, you may want to inform the company that the account was opened with. Identity theft is illegal and you should not be held accountable for the charges. Gather any documentation that can help prove your case and get in touch with the creditor.
Wondering if there is anyway to check somehow. Lets say someone gets a hold of enough of your informmation to apply for credit card to be sent to their house and they usr it but a whole month goes by before a bill comes is there anyway to look up or see somewhere that I have this credit card out there before negative things start happening to my credit?
Yes, what you are describing is credit monitoring. With a monitoring service, the credit bureau will alert you to changes in your credit report – inquires, new accounts, etc.
After losing my business and having a 4.3 million dollar BK, I took 1500 cash went to a credit union and got my first secured Visa Card. It was the only way for me, I knew. To begin the process of rebuilding. That card has turned into several cards two new car loans and the process of buying a new home. That was well over 135 credit points ago, lol and the score continues to climb