How Credit Score Affects Your Daily Life
You have probably heard about the importance of having a good credit score, but many don’t realize how it impacts most areas of your life, whether big or small purchases. It’s best not to be caught off guard and know the importance of having a good credit score and make a habit of keeping track of it regularly now.
So, which specific areas does credit score affect? We’ll go through each one of these for you and break down how both good and bad credit scores affect each of these areas.
When people think of what is affected by a good or bad credit score, they may often first think of mortgages. A home mortgage is one of the biggest purchases you will make in your life, costing hundreds of thousands of dollars or more. Mortgages are heavily affected by interest rates. Even the difference of one percent interest can add tens of thousands to your total payment over the lifetime of the mortgage.
Getting approved and landing a good loan with a lower interest rate is all influenced by your credit rating. So, having good credit is vital even for purchasing a home. Even if you aren’t looking to purchase a home yet, building credit takes time, which is why it’s so important to start thinking about and working on now.
Renting an apartment or home
Even if you aren’t buying a home and plan to rent, being able to rent a decent place, or any place at all is dependent upon having a good credit score. Landlords are hesitant to trust a renter without good credit. Often how high your credit score is directly affects your monthly rent payments. The higher your credit score, the lower your monthly payments.
Buying a vehicle
Whether new or used, buying a car from a dealership is a big purchase that most often requires a loan. Dealerships call various banks to find you the best deal with lower payments and interest, but this is all affected by your credit score. Having bad credit might even prevent a bank from wanting to give you a loan at all. But even having good credit, the difference of a few decimal points can greatly impact the price of your auto loan.
Applying for credit cards
Your credit score is run whenever you apply for a new credit card. The credit score requirement varies depending on the specific type of card you’re applying for. Credit cards with higher limits and better cashback or other benefits often require better scores to get approved. Keep in mind that credit cards that you pay off on time every month are a great way to build credit.
Although Federal student loans do not require a credit score to get approved, private loans or federal loans taken out by parents do. A poor credit score could mean much higher school loan costs and more student debt or could mean you not getting approved at all.
Cellphone carriers may check your credit score before deciding to give you a plan, if you have poor credit, they may deny you entirely. Or you may not be given as good of a plan or may be required to make a down payment before starting service.
Internet and cable
Even getting Wi-Fi or TV in your home can be difficult without good credit, or your rates may be much higher. And these days with all the work and appointments happening from home, Wi-Fi is a necessity.
Home or auto insurance
Although it’s not legal in all states, home or auto insurance companies will often run some version of a credit check on you to at least see if you have a poor credit history. If they do find poor credit, they may deny coverage, or your rates may be much higher than they should be.
Banks will often do a credit check or look at your history to see past accounts you may have had and how well you managed these bank accounts and money in general before allowing you to open a new checking or savings account. They may not allow you to open a new account if they don’t like what they find.
Electricity and other utility accounts
Various utility companies may check your credit score when you make an account. If your credit score is not good, they may require a cosigner or down deposit to be able to start service. Both of which can be a hassle for something as necessary as electricity.
Renting a car
Most car rental companies require a credit card to even allow you to rent or have very specific rules if you don’t have a credit card. They may not run a credit check, but they do require you to have good credit and a credit card to be able to rent a car, which can be a very important thing to have on a vacation.
At least employers do need to get written consent before checking your credit. But they often like to do this when hiring to check for any issues or reasons they shouldn’t trust you based on major discrepancies in your credit history. This is especially important for them if you are working with finances or handling money, they want to be sure they can trust you.
You can clearly see how your credit score affects every area of your life. Having bad credit can make many of life’s necessities more difficult and expensive. Having good credit all around gives anyone renting to you or loaning you money a reason to trust you’ll stick to your payments.
It may be tedious and even frustrating but working on building your credit and regularly keeping track of it is vital to make your life altogether simpler and more affordable in the long run. Don’t wait until you’re making a big purchase or applying for a mortgage to think about your credit. It’s important to work on it now since it takes time and effort to build. Then remain diligent to maintain and continue to improve it even when it’s good because you can’t afford to have bad credit since it really does affect every area of life.
iLOCK360 can regularly monitor your credit Score and alert you if any suspicious activity is detected. The last thing you want is a fraudulent loan or credit pull to cause your score to go down. iLOCK360 can make monitoring your credit score much easier so you can live without a worry. https://ilock360.com/