4 Things You Didn’t Know Depend On Your Credit Score

June 16, 2014, Written By Lynn Oldshue
bigstock-Credit-Score-5429457

When most people reflect on their credit score, they instantly start thinking about credit cards, and their ability to get low interest rates and high credit limits. However, your credit score affects far more than just your ability to get and use certain credit cards. In fact, your credit score is something that companies and financial service providers will look at your entire life. That means that your ability to rent an automobile or lease an apartment could be directly affected by your credit score. It might not seem fair, but it is how our society judges your ability to pay back your debts, and thus, gauges your responsibility. Obviously, your credit score won’t tell the entire story about your life. But most organizations don’t have the time to get all of the details, so they use your credit score to give them the information that they need in order to make a quick decision. A poor credit score might make a landlord believe that you might not be a responsible tenant. Too many inquiries for credit, and lenders might think you are desperate for cash. You need to understand how your credit score affects your life so that you can take measures to ensure that you’ll remain insulated against the adverse effects of a poor score.

Renting A Car

Renting a car seems like a fairly simple task. But that’s not always the case, especially when you don’t have the best credit. While not all rental car businesses are going to run a credit check, a significant number of companies do hard credit inquiries, and that may ding your credit score slightly. Even if you have cash or a debit card, you stand a good chance of getting your credit score checked. Make sure that your credit is where you want it to be beforehand, or else you might not be able to get the car that you want to rent when you need it most.

Home Insurance

Insurers always offer the same rates on different plans, correct? That doesn’t always happen—and if your credit score isn’t up to par, you can end up paying more than other customers for the same insurance. When it comes to home insurance, providers are going to check your credit score, and if your score is too low, they might not offer you insurance at all. Insurers want to see a solid credit history so they can ensure they’ll receive payment.

Buying A Home

No matter how much money you put down, lenders are going to be concerned with your ability to pay back the loan. While having a poor credit score can simply increase your interest rate in many other circumstances, having a poor credit score when trying to purchase a home can shut you out of the market altogether. For most people, the home is their most valuable asset, making a home purchase one of life’s biggest achievements. You’ll want to be absolutely sure your credit score is solid when you are thinking of purchasing a home.

Utilities, Phone Service, and Other Services

Most people don’t realize when they sign up for phone service, utilities or television service, a credit check is run to determine if you can receive services without a deposit. Those with poor credit scores often need to make an upfront payment or a deposit in order to receive services, while those with good to excellent credit scores may be given an account without any up-front payment.

If you are ready to take control of your financial life, you’ll need to understand your credit score and how it affects you. You’ll also need to understand the factors that change your credit score. Obviously, missing payments and going into foreclosure or bankruptcy will seriously affect your credit score in an extremely negative manner. But many people don’t know that using 100% of your credit limit on your credit card could negatively affect your credit score. Also, applying for many different lines of credit in a short period of time will ding your credit score. You’ll want to make sure you are consistently paying your bills. But you also don’t want to overuse your credit cards. Knowing that your credit score will play a factor in critical decisions in your life means you should do everything in your power to stay on top of your credit score. You should check it online on a regular basis. If you are going to take a big step in life, such as buying a home, make sure your credit is up to par beforehand. You don’t want to be left on the outside of a great opportunity because of a low credit score.



The information contained within this article was accurate as of June 16, 2014. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.