Credit Scores
Your credit score is a measure of your financial health that others may use to determine how reliable you’ll be with financial commitments. So how can that affect your finances?
Getting a Loan
Your credit score will likely determine whether or not you can qualify for and get a loan.
Interest Rates on Loans (yes, this includes credit cards!)
Have you considered the BIG difference your interest rate on a loan or credit card can make? Generally speaking, the lower your credit score, the higher interest you’ll pay over the course of the loan. Even a seemingly small difference of 1.6% over the 30-year term of a mortgage, can add $99,000 paid in interest.
Renting a Residence
Many landlords or property manager check credit scores of potential renters and are reluctant to rent to those with poor credit. It’s not impossible, but may require a co-signer on a lease and extra security deposits to be paid up front.
Getting a Job
A study by the Society for Human Resources Management found that 47% of employers look at the credit scores of potential employees as part of the hiring process.
Insurance
Most insurers will run credit checks before providing you with coverage. Your score will also impact the rates you pay for insurance. A low credit score can cost you hundreds of dollars more each year on car insurance than if you had a higher score, according to Consumer Reports.
Simply put and considering each of these factors, your credit score will not only indicate a measure of your financial wellness but also directly impact your current and future income as well.