Why Your Credit Matters

 

Your credit score matters. Many people think credit only matters when you apply for a home or auto loan. The reality is having good credit affects consumers in a number of ways. Here are just a few.

 

Renting a Home or Apartment

 

It is not uncommon for a landlord to check a prospective tenants credit report before renting a home or apartment. Landlords and property managers view your credit records to determine whether or not you manage your finances responsibly and are therefore likely to pay them the rent on time. Prospective tenants with bad credit are often not offered the rental property or can be subject to higher than normal security deposits in order to proceed with the rental.

 

Applying for a Job

 

Human resources departments routinely check credit reports as a part of the hiring process. Job candidates with bad credit may appear to be less responsible and more likely to be distracted by financial problems. Good credit is also viewed as a sign of stability which is a valuable atttribute to companies.

 

Cell Phones & Utilities

 

Almost all mobile phone providers require a credit check to determine spending limits and more importantly whether or not you need to pay a deposit. Many utility companies (landline, cable, gas and electric) will also waive cash deposits for people with good credit.

 

Insurance

 

Most insurance policies us a credit-based insurance scoring system when reviewing applications for auto and homeowners policies. Applicants with poor credit pay more. Actuaries have shown that a credit score a is a great predictor of future insurance claims.

 

Starting a Business

 

Most people don't know that when you start a business your credit matters. For the first few years a new business relies on the owners/principals credit history to apply for credit. This is particularly important in businesses where a credit line with suppliers is important. Business owners with bad credit often find it harder to qualify which can make purchasing inventory or having additional cash flow more difficult or more expensive.

 

Home or Auto Loans

 

While home and auto loans are obvious reasons your credit score matters, it is more important than ever with the current economic conditions. Banks and other lenders are more critical than we've seen in many years, thoroughly reviewing your finances and payment history to determine whether you are likely to repay your loan or mortgage. The better your credit the better the interest rate. A few years ago average to good credit could land you in your dream home. Now excellent credit is often needed to qualify.

 

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