Original article by David Treehouse
There is a reason why people want a good credit score. Most people realize that a good credit score will allow them to obtain credit cards with better interest rates than when they have a lower credit score. But there's more to it ...
People also know that when they are looking for home loans or car loans, they will qualify for better interest rates if they have a better credit score. But there's more to it than that, too ...
These reasons alone make it important for most people to keep their credit score as high as possible, but there are also some unusual ways that people don’t often think about when their credit score can have a great effect on the things that they do. Here are a few of the more unusual ways that a credit score matters.
1. Employment: How Your Credit Score Affects Employment
Did you know a prospective employer can look up your credit score?
If you are trying to land a new job, your credit score can help or hurt you. Employers look at your credit score to determine how reliable of an employee you are going to be.
The higher your credit score, the more favorably most companies will look upon you. A bad credit score may flag you as a risk to the company.
All things being equal except for two applicants’ credit scores, a company will usually opt for the applicant with the higher credit score.
2. Cell Phone: How Your Credit Score Affects Employment
Phone companies want to know if you can pay your cell phone bill. Your credit score may determine whether or not you can actually get that new cell phone plan. The phone companies want you to be a customer, but they want you to be a paying customer.
If your credit score is significantly low enough where they don’t believe that you will pay your phone bill, you may be denied a cell phone contract. As with most things that deal with credit, the lower your score, the bigger risk you appear to be to any company. Cell phone companies will consider this risk into account when deciding whether to offer you a contract or not.
3. Insurance Policies: How Your Credit Score Affects Insurance
The amount that you pay for insurance policies can also be directly related to what your credit score is. Insurance is a business that looks at the risks involved. People who have lower credit scores are bigger risks than people who have higher credit scores. Due to this, you are likely to pay more for insurance if you have a low credit score than if you have a high credit score. Insurance companies know that the data shows that those who have lower credit score scores are much more likely to make claims (and cost them money) than those with higher credit scores.
4. Renting and Leasing: How Your Credit Score Affects Renting and Leasing
When it comes time for you to get an apartment or if you want to lease a car, your credit score can have a profound effect on whether you’re able to obtain the lease or rental contract. Businesses want to know that you’re going to be able to pay the agreed upon amount in the contract. If you have a low credit score, it’s indicative that you do not pay your bills regularly and on time. This sends up a huge red flag to any business, and they may very well deny you these things if you have a low credit score.
5. Student Loans: How Your Credit Score Affects Student Loans
Imagine this situation ...
You have high income, but bad credit. Your child gets into their dream school. They apply for a student loan.
Your child gets denied for both Stafford and Perkins loans and grants because of your bad credit. What now?
Another area where your credit score matters is on the interest that you pay for education loans that you take out OR that your kids take out.
Higher credit scores can mean that you end up paying a lower interest rate than those with lower credit scores. Much like the interest rate associated with home mortgages and car loans, those who have better credit scores seem more reliable and therefore end up getting better interest rates. The same is true when it comes to education loans.
As you can see, your credit score can have a large impact on many areas other than getting a credit card, home loan, or a car loan. This is why knowing your credit score and doing your best to keep it as high as possible is important. It can mean a savings of thousands of dollars a year.
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