Unless you live in a cave (and maybe even then), you know that your credit score is incredibly important when it comes to securing credit. But did you know that it’s also used for much more than that? What follows is a list of five other areas of your life that can potentially be impacted by your credit score…
1. Renting property – Many (if not most) landlords now run credit checks on prospective tenants. Think about it… They’re essentially giving you a credit line when you sign a year long lease, but are allowed to pay it off in monthly installments. In many cases, bad credit = no apartment (or house, or whatever).
2. Cell phones – Cell phone companies typically check your credit before signing you up for service. Here again, they’re essentially extending you a credit line and they want to be sure you’re good for the money. Not only are they concerned that you might rack up a bunch of airtime charges and be unable to pay for them, but they’re also letting you walk out the door with a shiny new handset at a (sometimes steep) discount. They want to be sure that you’re good for the standard monthly charges. Crappy credit might result in you being shunted over to a pay-as-you-go plan, and the hardware deals might not be as good.
3. Future credit card agreement changes – It’s not uncommon for credit issuer to run routine credit checks (so-called ’soft pulls’, which don’t show up as credit inquiries on your credit report) on existing customers. If your credit score takes a nosedive, you represent a bigger risk, and they might change the terms of your agreement (e.g., increase your interest rate) to reflect that.
4. Car insurance – Car insurance issuers are increasingly looking at credit scores as a way to gauge risk. If you’re reckless in one area of your life, you might not be a good bet in other areas. This can result in higher premiums, or they might simply decide not to cover you.
5. Employment opportunities – I’ve never experienced this one first hand, but I’ve heard that it’s increasingly common for employers to include a credit check when looking into the background of prospective employees. In short, they’re looking to see if you’re responsible. Credit reports also provide an employment history. Of course, they can only do this with your permission, so hopefully you read all of that paperwork that they give you when you apply before signing anything. Then again, if you decline they’ll more than likely show you the door.
If you want to check your FICO score, you can use this myFICO discount code to save 20%, or you can get a free credit score from Credit Karma.