Some people ignore their credit score until it’s time to find a loan. In the past, that’s what credit scores were primarily used for. However, you might soon get a rude awakening (if you haven’t gotten one already). Credit scores are being used by more and more businesses to make decisions about you.
#1 – Your insurance rate
It sounds absurd, but your credit score impacts whether you get insurance and how much you pay for it. Insurance companies argue that people with lower credit scores tend to file more claims. To make up for the risk, they’ll charge you a higher rate. Expect all types of insurance companies – auto, life, and homeowner’s – to check your credit score as they decide your annual premium.
#2 – Your credit card approval and terms
If you’re looking for a new credit card, the card issuer uses your credit score to figure out whether to approve your application for credit and at what interest rate. Lower credit scores could mean you get a higher interest rate, or even denied for a credit card.
#3 – Your existing card’s interest rate, credit limit, and whether you keep your account
Your current credit card issuers will check your credit score periodically to determine whether to change your account terms. A low credit score might result in an increase in your interest rate, a reduction in your credit limit, or worse, a cancellation of your credit card account.
#4 – Your rental application approval
Landlords and apartment complexes use your credit score to decide whether to approve your rental application and how much your security deposit will be. If you have a low credit score, you could pay a higher security deposit to move into a new apartment. Serious credit blunders will get your rental application denied.
#5 – Your job status
Your credit influences whether you get a job. Employers are increasingly checking credit as part of the application process. Serious credit blemishes, like unpaid debt collections, high credit card debt, or bankruptcy could get your employment application denied. Yes, you could end up unemployed because of a poor credit.
#6 – The promotion or raise you’re up for
Potential employers aren’t the only ones who check your credit. If you’re up for a raise or promotion, your employer might check your credit score before making the changes. Credit checks are common for financial and top executive positions, but that doesn’t mean an employer won’t use them for other types of jobs. (Don’t worry, though—a credit check won’t take you by surprise. Employers are legally required to let you know about an employment credit check ahead of time.)
It’s never “out of sight, out of mind” when it comes to your credit score, because it’s never out of sight. More businesses could make the argument that your credit score matters to them, so it’s always important to try and improve a bad credit score and maintain a good one. Note that not every financial activity, like investing in the stock market or forex trading, requires good credit. But you should really have the rest of your financial ducks in a row before risking your money on speculative investments.