You need to have a good credit score to get a good, low interest, home or car loan. That’s a fact that most people are aware of. What isn’t as obvious is the other ways that your credit score can affect your everyday life. Your credit score is an integral part of your life. Here’s what a poor credit score can mean for you:
- Inability to get a job
- Trouble renting an apartment
- Higher insurance costs
- Prevent you from getting a phone or utilities
- Cost you a relationship
It is increasingly common for companies to ask you to submit to a background check when you apply for a job. Part of this check is often a credit report. A poor credit report is generally considered a representation of poor planning skills and a lack of responsibility. This can be enough to remove you from contention for the job.
If you are looking to rent an apartment, the landlord can use your credit score as a determining factor. You probably won’t be the only applicant out there. Since your credit score is a representation of how well you pay back debts, a landlord is almost always going to choose the applicant with a higher credit score to occupy their rental.
A low credit score is a risk factor according to insurance agencies. The lower your score is, the higher your premiums are going to be for car, home and other insurance policies. The amount that your premium will increase will be different from one provider to another, but the effect will be consistent between them.
If you’ve ever tried to get a new cable or phone contract, you know that there is a credit check involved. This isn’t used to determine if you can get the service, but rather if you can get the equipment without a security deposit. A poor credit score could result in a $300-$400 deposit to enter into a contract. If you don’t have the money available, you’re out of luck.
One of the newest trends in dating is for potential long term relationships to start with a full disclosure of credit reports. Your credit report says a lot about your behavior on financial issues. According to Lisa J.B. Peterson of Lantern Financial, a Boston financial planning group in an interview with Forbes Magazine, “Risky versus debt-averse personality types that show up in credit scores may paint a pretty good picture of how each person will act in the marriage. It comes down to communication, but that can be really challenging if the personalities are so different.” That’s means a low credit score might be an indication that you are not compatible with your higher credit score partner and that you will have frequent fights over money during your relationship.
Don’t worry if you currently have a low credit score. There are several things you can do to bring it up and we’ll be discussing those later this week in a feature on quick hacks to raise your credit score.