The sheer variety of ways in which your credit rating can have an effect on the quality of your life is quite remarkable. Extending well beyond buying a car or a home, all sorts of businesses have decided your creditworthiness should have a bearing on the way they do business with you — or even if they should at all.
This is why your credit history matters today.
It Determines Where You’ll Live & What it Could Cost
As we mentioned above, your credit score comes into play when you’re applying for a home loan. In addition to qualifying for the loan, your credit history will also figure into the interest rate you’ll pay.
The higher your score, the less of a risk lending to you is perceived to be — so you’ll get a lower interest rate too. That interest rate could be the difference between affording the neighborhood you love and one you don’t prefer as much. A few extra percentage points could make that nice neighborhood unaffordable.
Still, even if buying isn’t one of your goals, landlords look at credit histories when they’re deciding if renting to you is a safe bet. They’re happy you called when you have good credit. Poor credit though? Yeah, not as much.
What You Drive and How Much You’ll Pay
The good news is it’s possible to find someone willing to write you a car loan regardless of your credit history. However, you can bet it will be very expensive if your credit history has a lot of negative entries. On the other hand, if your credit score improves after you get the car, a bad credit car loan refinance can help you bring those payments down.
Insurance and Utility Companies Consult It Too
Electricity, telephone, cable and internet providers want to know your credit is solid too. Thus, even if you can find a landlord willing to rent to you with a marginal credit history, you’ll have trouble getting these essentials on your signature alone.
Most of them will require cash deposits before initiating service. These companies look at it as they’re providing you with the service in advance, so they want to make sure they’ll get paid. Your good credit history is the source of that assurance.
Meanwhile, studies show people with poor credit histories tend to file more insurance claims than those with good credit. This can determine your ability to get a policy, as well as what it will cost you.
Looking for Work or Starting a Business
Employers have been known to run credit checks as part of the hiring process, particularly for positions in finance. Your credit history will also come into play If you’ll require any sort of security clearance to do your work.
A great credit history will stand you in good stead when you’re looking for a loan to start a business too. Sure it’s possible to start a business with next to no money, but it’s a lot easier with a willing financial institution backing you.
These are just four of the reasons your credit history matters. Long story short though, it’s about far more than just getting loans, Your credit record can also determine where you’ll work, if you can start a business and where you’ll live.
Your creditworthiness is defined in large part by how timely you pay your bills. However, it can also be considered a measure of your ability to manage responsibility. People don’t want to take chances on those who have demonstrated a propensity for nonchalance when it comes to living up to obligations.
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