You may not know this, but your credit score is actually one of the most important financial statistics in your life. Many people often neglect to keep a constant watch over their credit score, but this could stand you in bad stead in a number of avenues you may not be aware of. It takes seconds to discover your credit score, and yet knowing this information can help immensely when it comes to making financial decisions. Here are 9 surprising ways that your credit score can affect your day-to-day life.
1. Taking out loans
Alright, so maybe this one isn’t particularly “surprising”, per se. However, taking out loans and being approved by lenders is one of the most significant ways that credit score affects your life, so it’s definitely worth mentioning. If lenders see that you don’t have a good credit history, they won’t want to give you credit, and that’s a vicious circle, because you won’t be able to lift yourself out of the trouble you’re in. Of course, there are always bad credit loans available, so even if you do find yourself in financially dire straits, there’s usually a way out.
2. Applying for a mortgage
A mortgage is, after all, a type of loan, so it stands to reason that a poor credit score could adversely affect your chances of getting one. Again, if lenders see that your credit score isn’t good, they may think you won’t be able to make regular mortgage repayments, so they could decline your application. Unlike loans, it can be more difficult to get a bad credit mortgage, too, so if you’re looking to buy a house, it’s definitely in your interest to try and improve your credit score.
3. Getting a job
Yes, it’s true – employers do actually look at your credit score before making the decision to hire you or not. They do this because they want to know how financially solvent you are; if they’re going to keep you on their payroll, then they need to know that you’re not going to make any rash decisions or do anything foolish while you’re working for them. This isn’t the case for all employers, of course, but it’s not worth the risk in our opinion, so this is just another reason to keep an eye on your credit score.
4. Applying for a credit card
Again, this one might not seem so “surprising”, but applying for a credit card can be significantly more difficult if you have a poor credit score. The reason is pretty much the same as it is for every other application that’s affected by credit score; lenders want to see that you’re able to make repayments, and if your credit score is low, they might think you aren’t financially solvent. Some lenders will provide credit cards for people with bad credit scores, but these can sometimes be financial traps that will leave you in worse health than when you started.
5. Buying a car
If you choose to fund your vehicle purchase through finance, then – you guessed it – you’ll probably be subject to a credit check. This can make it difficult for you to secure financing, meaning you might have to look to more direct means for buying a car or any other type of vehicle. This can be especially problematic when you’re trying to buy an expensive car; many of us don’t have the cash on hand, and without financing, it’s extremely difficult to find another option.
6. Getting a new phone contract
In the UK alone, estimates suggest that around 84% of people have a phone contract that they pay for on a monthly basis. With tech often running into prohibitively expensive numbers these days, this can often be the only way to afford a phone, a tablet, or any other kind of device, but you’ll often need to go through a credit check before you can get a contract. In addition, missed payments on existing phone contracts will show up on your credit check, leading to a cyclical problem whereby you can’t get a new contract.
7. Setting up new utility accounts
Let’s say you’ve just moved home. You need to set up utility accounts for electricity and water, as well as internet and other amenities. Service providers will often run credit checks on you before they open new accounts; they want to know you’ll be able to pay your bills. If you don’t have a good credit score, you may find it hard to get new utility accounts, which can be a real headache if you’ve just moved or you want to switch providers.
8. Getting insurance
Just like lenders in lots of other areas, insurance providers often run a background check on people who apply for their services. These checks can include credit score checkups, because if you don’t have a great credit rating, you might be more of a liability in an insurance provider’s eyes. Obtaining good insurance coverage can be extremely hard if you don’t have good credit, so make sure you’re covered before you set out to apply for this.
9. Renting a flat
If purchasing a home is difficult when you have a poor credit rating, then it stands to reason that setting up a new tenancy agreement would also be tricky. Landlords can be extremely picky when it comes to money; they don’t want their tenants to default on rent, so they won’t allow anyone who isn’t reliable to rent their property. It’s difficult enough to get onto the property ladder without struggling to make your rent as well, but landlords can often be brutal when it comes to making this decision.