Some people think they don’t need to worry about their credit score because they plan to live a debt free life. Although you can certainly spend your life without credit, credit scoring plays an important role in many “hidden” areas. Even if you have never made a loan or opened a credit card account, your credit score will affect your life in the following five ways:
If you want to own a smartphone, you probably need to finance it. Since the price of the latest brand is as high as $1000, most people can’t simply buy the latest gadgets in advance. Instead, they add a small monthly fee to their service bill every month. Even if you can pay in advance or use an old mobile phone, most mobile phone companies need to check their credit before providing services. If you have poor or no credit, you may need to pay the down payment before you get the phone.
Of course, you can choose to pay in advance, but you usually pay more for fewer services. You can also try to add a client to your mobile plan, but please note that if you don’t pay, they will be responsible for paying your bill. Another option to avoid down payment is to join the family plan, because only the major account holder must have a good credit record.
If you don’t have some established credit, it’s almost impossible to rent your own house. When you sign the lease, you agree to pay a fixed amount over a period of time. If you don’t pay, the landlord may eventually lose a lot of money, especially if your state has a long eviction process. Since your credit score reflects your ability to pay on time, the landlord usually checks your credit during the application process. In addition to determining whether you are approved, your credit score may also determine whether you need to pay an additional deposit. A bad credit score may cost you hundreds of dollars. In addition to the deposit, you may have to pay the rent for the first and last months.
Even with a limited credit history, there are ways to improve your chances of getting an apartment. It doesn’t have to include paying more money. If you have rented an apartment before, please ask your old landlord for a letter of recommendation. In addition, voluntary signing of longer leases; This will help your prospective landlord reduce vacancies and waste time and money when trying to fill vacancies.
Utilities such as cable, electricity, telephone and water are basically short-term loans because you use these services before you pay. Utility companies want to make sure they get paid and almost always have credit checks when you apply for new services. In fact, not paying utilities on time may damage your credit score. Although basic services such as electricity and water usually have to accept any customer, they are usually able to charge a deposit. Customers with good credit may not need to pay a deposit, while customers with poor credit usually need to pay a deposit for months of service. Utility companies usually use a variant credit score called utility score. You guessed right. It pays more attention to the history of your paying water and electricity bills. Therefore, even if you do not have a large number of traditional credit records, your utility score may actually have entries. If this is your first registration, please try opening an account with your roommate or other agent again to help pay potential deposit requirements.
Your insurance company cares about your credit score for two reasons. First, if you choose to pay by instalments, they want to make sure you pay on time. More importantly, with the passage of time, insurance companies find that those with bad credit are more likely to file claims, which brings greater risks to insurance companies. Bad credit is also often associated with lower income and savings. People with less available cash usually make smaller claims, that is, people with more cash usually pay out of their own pocket. If your credit score is below the standard, it is expected to take longer to obtain approval and higher interest rates. Unfortunately, this applies to most types of insurance, including cars, renters and homeowners. It is also worth noting that the insurance company will also closely track your claim history. The more claims and even inquiries you record, the higher the premium you will pay in the future.
In a world where almost everyone has a college degree, credit scores are increasingly used to screen job seekers. This practice has been used in the past for sensitive positions related to national security and the financial sector. However, now you can expect to see credit score reviews in any number of jobs, whether they are related to national security or finance. A high credit score is regarded as a sign of responsibility and shows that you can trust your work. People with poor credit may be seen as potential personal stress and distraction, which will affect their performance of their job responsibilities. Whether these are true or not, employers will continue to check your credit history when making recruitment decisions. If your credit history is limited and you know that your potential employer will withdraw your credit report, please consider writing an explanation letter.