Published in: Credit Cards | Nov. 21, 2018
5 Sneaky Ways Your Credit Score Affects Your Life
By: Lyle Daly
Some of these scenarios will surprise you. Find out the unexpected times when your credit comes into play.
Image source: Getty Images.
You probably already know that your credit score plays a major role in credit card and loan applications, and it obviously determines the terms you’ll get if you’re approved for either of those. But that’s just the tip of the iceberg.
If you thought lenders would be the only ones checking your credit, then you’re in for a surprise. Here are the other situations where your credit score can affect your everyday life.
1. Your car insurance rates
In 47 states, car insurance carriers can use your credit as one factor in determining your premiums. The only states where this is illegal are California, Hawaii, and Massachusetts.
How much of a difference can your credit score make on your car insurance? In its State of Auto Insurance report for 2018, The Zebra found that drivers save an average of 17% on their annual premiums each time they move up one credit score tier. The tiers in that report were as follows:
- Poor -- 300 to 579
- Average -- 580 to 669
- Good -- 670 to 739
- Excellent -- 740 to 799
- Exceptional -- 800 to 850
By attaining a credit score of at least 800, you’d save over $1,400 per year compared to what you’d pay with a poor credit score.
2. Rental applications
While your credit score is crucial when you’re buying a home, it’s also important when you rent one. Most landlords and property management companies worth their salt run a credit check on prospective tenants. Any issues on your credit report, especially those related to your payment history, could make a landlord think twice about renting to you.
If it comes down to you and another applicant with a better credit score, then you’ll likely lose out on the rental. Even if your apartment application gets approved despite a low credit score, the landlord may ask you to pay a larger deposit.
3. Setting up utilities
You can add utilities companies to the long list of parties that will be interested in your credit. When you’ve moved somewhere new and you’re setting up accounts with the utilities providers, they’ll typically check your credit to determine how much of a risk you pose.
Those with low credit scores may need to pay a deposit upfront to their utilities companies. After you’ve established an on-time payment history, you can usually get your deposit refunded. But as you can see, moving gets more expensive when you have a low credit score.
4. Cell phone plans
Credit checks are a standard prerequisite before you can sign up for a cell phone plan. The service provider wants to protect itself against customers who may default on their bills, especially if those customers are getting expensive phones upfront that they’ll be paying off over the next 24 months.
Like utilities companies, cell service providers may ask you to pay a deposit if your credit isn’t good enough. If you don’t want to do that, you can opt for a prepaid plan.
5. Employment opportunities
Even employers can check your credit -- to an extent. If you consent to a credit check, a company that’s thinking of hiring you can get a modified version of your credit report without the score or any of your account numbers included.
Whether this happens will depend on both the employer and the type of position. It’s most common with positions that involve managing money or include access to sensitive information, as employers want to protect themselves against theft and fraud.
The everyday impact of your credit
A bad credit score won’t just take you out of the running for the best credit cards. It can cost you money every month on your car insurance, lead to you paying costly deposits on the services you need, and ruin your chances at the job or apartment you want.
Fortunately, the inverse is also true. By putting in the time and effort to build your credit, you’ll eliminate quite a bit of potential stress from your life. It can save you money, and your credit score will be something that opens doors for you instead of closing them.
Our #1 cash back pick has a surprise bonus
This may be the perfect cash back card! That's because it packs in $1,148 of value. Cardholders can earn up to 5% cash back, double rewards in the first year, and avoid interest well into 2020. With such a deep bench of perks you'll wonder how this card packs in a $0 annual fee. Best yet, you can apply and get a decision in two minutes. Learn more with our in-depth review.