Some important financial decisions people make depend on current loans they have. Lenders look at the borrower’s FICO score to determine their ability to maintain good credit by reviewing their current debt and credit history length. Having low credit can lead to financial regret and makes it more difficult to secure employment or to rent an apartment. It’s easy to underestimate the impact your credit score will have in life.
Buying a Cell Phone
Cell phone providers will check your credit score before signing a contract, even though they don’t report your score to the credit bureaus. With a contract, customers pay a fee in monthly installments, typically within 24 months. Some providers may consider giving their customers a discount for having good credit.
You may miss out on job opportunities if you’re stuck with poor credit. New employees are typically run through a background check, granting their employer access to their medical records, criminal history and credit reports. Some employers may fire employees for having bad credit, which could threaten the ability to secure investments. Credit check services for employers are important for corporations seeking to improve risk management and prevent unexpected financial losses.
Renting an Apartment
Several landlords expect a score minimum of 620 for you to rent an apartment. More high-end apartments may set a higher minimum. They will run a credit check to see if you have outstanding debt or a derogatory public record that may include previous foreclosures or evictions as well as past bankruptcies. Landlords want to ensure you’re able to pay the rent on time and make a security deposit.
There are several other reasons why having good credit is important. From saving up for retirement to signing a mortgage, good credit is helpful in securing those decisions without hidden fees or added cost. A high credit score demonstrates to lenders and employers that you’re able to keep up with monthly payments and can manage money well.