Do you think the only thing a bad credit score can do is keep you from getting a low interest rate on a loan?
If so, you’d be dead wrong.
There are a number of ways a bad credit score could hurt you, including some you might not have ever imagined.
Relationships have ended when one of the partners discovered that the other had a bad credit score due to a boatload of debt. And in the case of a divorce, credit scores are sometimes used in divvying up the couple’s net assets.
Renting a house or an apartment
A potential landlord can demand to see your credit score before renting to you. Depending on what they see, you might get turned down for that neat apartment or house you thought you’d soon be living in.
If you check that little box on an application form that gives the prospective employer the right to see your credit report, you might not get the job. Employers are legally allowed to use credit scores as part of the hiring process. However, if they refuse to hire you because you have a bad report, they must tell you this.
A higher auto insurance premium
Many auto insurance companies now believe there is a direct relationship between people’s credit scores and the likelihood they will have an accident. Some create their own version of a credit score with more emphasis on on-time payments than your total debt. Some companies then use this information to compute your premium or to even deny you coverage.
This is similar to auto insurance in that some insurers see a correlation between a bad credit score and a lot of claims. Maybe they believe that people with less cash have more of a motive to file suspicious claims. In any event, if you have a bad credit score, you might end up paying more for your homeowner’s insurance than a person with a good credit report
Gas, water and electricity companies now typically check credit scores before starting services. If you have a bad credit score, you’ll still get the electricity you need to run that high-definition TV but you may have to put up deposits to get those services.
Congress passed the Fair Credit Reporting Act a few years ago. While it provides us with some protections, it also has some downsides. For example, the governmental agencies that regulate professions such as doctors, lawyers and other such professions can use credit scores in deciding whether or not to grant licenses.
While credit scores have long been used in qualifying people for home loans, there are now rules that put even more of a emphasis on applicants’ creditworthiness. This is due mostly to the high number of foreclosures we’ve seen since the financial meltdown of 2007.
What’s your score?
You’ve undoubtedly seen the TV commercials that end with the phrase, “what’s in your wallet.” Today, as you can see an equally important question is “what’s your credit score?” If you haven’t seen it lately – or ever – you really need to get it.
Where to get your score
You can get your credit score from any of the three credit bureaus (Experian , Equifax and TransUnion) but you may have to jump some hurdles to get it and won’t be your true FICO score. The only place you can get your FICO score is at www.myfico.com. And it’s important to get your FICO score because it’s the score almost all lenders use in determining whether to grant you credit and at what interest rate.