Think of your credit score as a big number on your head that anyone can see (even if you pretend it’s not there), and people will treat you differently according to what they see. Below are five ways that credit can significantly affect your life on a daily basis.
If you have below-average credit, it could be costing you a lot more than just money. Your credit could be what is keeping you from landing your dream job or getting into your perfect home.
1) Your Home:
Even for people who are just renting and not buying a home, credit is still king in determining what home or apartment you can live in. Although there are laws protecting tenants from discrimination based on race, religion and even familial status, landlords can definitely deny you based on your credit score. This news can be highly discouraging to anyone who wants to live in a nice home located in a good school district, in a neighborhood with low crime, or just a location that is central to all of your needs. Landlords might be persuaded to trust you if you can pay a higher deposit and if you offer more money upfront– like first and last month’s rent. So, not only can bad credit cost you more money out of your pocket, it can also keep you out of your dream home or apartment.
2) Your Smartphone:
Today it seems like a basic right to have a cellphone, and not a luxury. But truth is, major cellphone companies can be as selective as they want with who they approve for no-money down phones with preferred customer phone plans, and who they require high deposits and upfront payments. It might seem unfair again that not everyone can get the best deals, but it all comes down to whether or not they think you will default on the plan. You might not be able to afford the phone or plan you want if your credit isn’t up to their standards.
3) Car Insurance Premiums:
Your car insurance rates are based on a few factors; like your driving record, your age and your gender, but many people would be surprised to hear that your car insurance is also impacted by your credit score. According to CNN Money, it can almost double your rate. It is hard to see the justification behind drastically increasing car insurance rates because of bad credit, but it is completely legal in all states except for California, Massachusetts, and Hawaii. This can make it hard for you to get the best coverage that you need, exposing you to the risk of being underinsured.
4) Your Job (wait what!?!):
This goes against many of the ideals of the American dream, but your credit can prevent you from qualifying for certain types of jobs or employers. With an exception of just a few states, employers can use credit history to vet potential employees. And they do. According to a survey conducted by SHRM, the Society of Hiring Resource Management, about 47% of employers use credit checks as hiring criteria to help them make hiring decisions. Which means if you have less than perfect credit, your credit history could cost you your dream job.
Obviously, certain professions, like money handling jobs or security jobs, get credit checks, but even regular, everyday jobs including office, sales, IT professionals, and even health care workers are getting scrutinized.
Think about it, employers look at credit to help predict employee integrity and to help reduce their liability for negligent hiring. If someone has a problem paying bills on time, has garnishments or liens, and other bad credit issues, it means that person might not be reliable. If a HR employee has a stack of job applicants, credit checks are an easy way to weed out possibly “problem” employees.
5) Your Loan or Credit Card Approval:
The most obvious way your credit score can affect you is whether or not you qualify for loans or credit cards. From personal lines of credit to academic loans, banks will base their lending decisions on your history and your credit score. They use this data to determine if they will loan you money, and how much interest they will charge you.
Do I need a perfect score to get a loan?
Although 850 is the top score achievable, it is way beyond what most lenders require. Some lenders will give out loans to people with less-than-perfect credit, but the interest rates that they give will depend on credit risk. At one time the standard for lending at the best interest rates (called the prime rate) was 680, but now post-recession threshold scores are more like 720 or above, according to Martha White from Time magazine.
It might be hard to believe that a simple number like a credit score can have such an impact on your life, but in today’s increasingly interconnected world it is more important than ever to be aware of what is on your credit report. Bad credit can cost you more than just money– but the good news is that it is never too late to start building good credit.
Read this article on “The Easiest Way to Add 100 Points to Your Credit Score” for some ideas on how to get started.
Tip: When you are ready to start extensive credit repair you can contact experienced professionals at Lexington Law at (800) 210-5234 for more information.