9 Ways Your Credit Score Can Affect You
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Thank you for joining me in this episode of PFCU’s Money Talk, I’m your host Maddy. If you’ve listened to our previous episodes on credit score, you probably already know that your credit score is an important aspect of your finances but do you know all of the reasons why? In this episode I want to go over the many ways your credit score can impact your life. Some of these were surprising to me and I think they’re really important to know so you’re not surprised as you plan and make your financial decisions.
The first way that your credit score an impact you and one that you’re probably already aware of is buying a house. Now it’s really up to the lender to decide whether or not to give you a mortgage or offer you the lowest rates and the loan type can also play a part in what credit score you need to qualify for a mortgage. However, a lower score can make it less likely that you will qualify for the lower rates or get approved for the mortgage at all. Of course, it is possible to get approved with a lower score, you may just have some different terms like getting a cosigner or having to lessen the amount you borrow.
To go along with buying a house, we also have renting an apartment. Landlords want tenants that are responsible with money that they can trust to pay the rent each month so if your credit history isn’t so great, showing signs of late payments or missed payments or any other issues, the landlord may not want to rent to you.
Next we have credit cards. When you apply for a credit card the issuer is going to check your credit to determine if you qualify and with what terms. Now this will vary depending on the lender and the card type you are applying for- different cards have different qualifications. For example, rewards cards and those with low APRs or annual percentage rates require higher scores but there are cards for people that have poor or no credit such as a secure credit card. Getting a credit card and making consistent, on time payments can be a great way to build your credit. So look around at different credit card options and see what will work best for you.
Just like getting a mortgage, getting approved for an auto loan depends on the lender. Some lenders are willing to work with people that have low or poor credit however, the rate you qualify for is related to your score. With a lower score, you will likely be paying a higher interest rate which means that you’re going to be paying more interest over the life of the loan. This is something to consider.
Next we have private student loans and federal student loans taken out by parents. Federal student loans don’t require a credit check but private student loans and federal student loans that are taken out by parents, do. Similar to many other aspects that we covered, a lower credit score can mean not getting approved for a loan or paying more in interest.
Now the next few that I’m going to go over were the most surprising to me.
The first one is utilities. With your permission, electricity, cable and other utility companies may check your credit report. You could be required to put down a deposit or add a cosigner before services are provided to you if you have poor credit.
Next we have phone contracts. Poor credit could mean that you get denied service or don’t have as many options such as a payment plan on your phone. You may also have to pay a deposit before service begins.
Auto insurance. With your permission, again, auto insurance companies can check your credit to determine rates and terms. Poor credit has been related to higher risk so insurance companies use your credit to help them determine the risk that you will file a claim. I found this really interesting, that they’re relating credit to a higher risk of filing a claim. Many factors go into determining your rates in addition to credit including driving history and claims on your record.
And the last thing that your credit score can affect is your career and your employers. Employers must get written permission from you before checking your credit report. Any major negative records can indicate to an employer that your level of responsibility and ability to manage money may not be so great. This is especially true for applicants applying for a financial role or for any position that handles money. 16 percent of companies pull credit on all potential employees and almost one third do credit checks on some candidates and this is according to a 2018 HR dot com report. Just remember that when you, if you’re getting your first job or you’re starting to interview for a new job or get into your career that they may ask you for your credit report. They want someone in those positions who are responsible with handling money and manage it well.
Alright and that’s all I have for you for this episode of Money Talk, I hope you join me again!
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