The day you get your first credit card is the beginning of life-long journey of credit worthiness. Credit worthiness determines the possibility that you may default on a debt. The more “worthy” you are, the higher your credit score and the more credit you can get. Today, FICO assessments are turning into an essential factor considered by many business and building and maintain a high score can save you money in many ways.
Employment
Employers cannot directly access an applicant’s credit score, but they can access a credit report (no score) with the applicant’s permission. The percentage of employers that perform credit checks on applicants is relatively low, about 13%, but for positons that provide an employee any direct or indirect access to finances, the likelihood that a credit check is performed is higher. You may think that this would apply to just an Accountant position for example but many other positions deal with money. Cashiers usually handle money and some stores may choose to implement credit checks even on what may be considered an entry level position like this. Don’t let your credit score cost you a possible dream job.
Renting or Buying
Most people already know that if you are buying a home with financing, the lender is going to check your credit. Your credit score will determine the interest rate for your loan. Just a few percentage points could swing your monthly mortgage payment a few hundred dollars an you total interest payments by thousands of dollars over the life of your loan. At no time is having a high credit score more important than when you are buying a property. Many do not realize though that even if you are renting, the landlord or management company will likely require a credit check. It usually does not affect your monthly rent payment but it will affect your deposit. Everyone has to lay their head somewhere so whether you rent or buy, make sure you maintain a good score to keep more money in your pocket.
Utilities
Utility providers, like those for your gas, water, and electricity, may also check your credit score. While the monthly rate is usually not adjusted based on your credit worthiness, you may be required to put down a larger deposit to get services turned on if your credit score is low. The FTC advises that utility companies can require a credit check but customers can also obtain a letter of guarantee in case you prefer to avoid the credit check. By keeping up great credit and goo payment history with utility companies, you can avoid paying a higher deposit when you move into a new home.
Insurance
Most car and home insurance agencies now check candidates' credit worthiness which tends to affect premiums and other costs. Some of the research these insurers are going by indicates that individuals with a lower credit score pose a more serious danger of documenting a claim than those with higher scores. And let’s all remember, most insurance companies do not want you to file claim despite all the advertising that tells you how they will protect you in emergencies. It’s important to compare insurance quotes not just the first time you obtain, but continuously every 6 to 12 months. If your credit score has increased during a particular time period, this may give you leverage to negotiate better rates. While it may not appear reasonable that your credit score as a consumer is utilized to judge your hazard as a driver or a property holder, this practice is upheld by the law. Hence, keeping up astounding credit can spare you several dollars a year in protection premiums.
5 Ways Your Credit Score Affects Your Finances
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