There’s a common misconception that credit doesn’t matter until you’re applying for a mortgage, credit card, or personal loan. Truthfully, most people don’t even review their credit history until they need to borrow money or a line of credit. Although having a good financial record does apply in these circumstances, it’s just the tip of the iceberg. Ultimately, a consumer’s credit is used in many different areas of their lives.
Character, Risk Level, And Financial Responsibility
Creditors, lenders, retailers, and service providers use credit reports to assess potential customers. There are risks involved in loaning money, credit, products, or services. If consumers don’t repay their balances in a timely fashion, these establishments suffer a loss. As such, getting a general idea of a person’s creditworthiness helps businesses to make an informed decision.
Whether you know it or not, your credit score and history tell a lot about how you handle your finances. It showcases your level of character and financial responsibility, which dictates your risk level. If your credit is less than satisfactory, it can have a significant impact on your everyday life. Continue reading to learn more.
Renting An Apartment
A good credit report is indeed necessary to acquire a home loan. However, did you know that it can also affect your ability to rent an apartment? Though you’re not borrowing any money to secure a property lease, you are making a promise to pay your rent on time. Landlords rely on rental payments to maintain the mortgage, keep the property intact, and cover other expenses. If you don’t pay, this puts them in a bind. If your credit check shows that you don’t pay your bills on time, it could backfire. Some applicants are rejected and unable to find a suitable place to live. Others are required to pay a higher deposit as a means of security for landlords.
Water, electricity, and gas are some of the basic necessities of everyday life. However, you may not know that your credit history has a significant impact on your ability to get utility services in your home or apartment. Utility companies need to know that you’re going to pay for these services. So, they review your credit report for more information. If you have a low score, past due balances, and collection accounts, this sends up red flags. If you’re not turned down for services altogether, chances are you’ll be required to pay a sizable deposit to get started. The utility company holds the deposit in an account that’s used if you fall behind on the bill.
Loan And Credit Card Interest
Your credit score doesn’t just help determine if you get approved for a loan or credit card; it’s also a determining factor in how much you’ll pay in interest. The higher the interest rate, the more expensive it is for you to borrow money. Over the lifetime of the loan or credit card account, consumers can spend extra hundreds if not thousands of dollars in interest alone. How much more money you’ll pay, is determined by your creditworthiness. Someone with a credit score of 650 is going to pay more for a mortgage, student loan, or credit card than someone with a score of 750 or higher.
Getting Things In Order
As you can see, your credit impacts a lot more than you think. Whether you’re trying to rent an apartment or get utility services setup, your credit is evaluated to determine your character, risk level, and financial responsibility. Essentially, a person with poor credit will have a difficult time acquiring things they need. Even if they do, chances are they’re going to pay a lot more. That’s why consumers are encouraged to use financial management practices and resources like no credit check online loans to improve their credit.
Life is already challenging enough. Why make things harder if you don’t have to? Now that you have a clearer understanding of how your credit impacts everyday life, you can take steps to turn things around for the better.