19 Dec How Your Credit Score Affects Your Everyday Life
It’s in the teenage years that teachers, parents and other mentors begin preaching about how credit scores affect your life. Many people understand that their credit score may help or hinder their ability to get a credit card, home mortgage or loan. However, there are unexpected ways your credit score can affect you too. Learn how credit affects your life in expected and unexpected ways here.
Common Ways Credit Affects Your Life
How does a credit score impact your life? Your credit score can affect major life purchases and financial decisions, such as obtaining a loan for a vehicle, getting approved for a home mortgage or taking out a new credit card.
Obtaining a Car Loan
Your credit score has a significant impact on whether you obtain a car loan from a dealership or lending company. An excellent credit score is most likely to get you approved for a loan with a lower APR. Contrarily, a low credit score may result in a high APR and a drastically larger monthly payment.
Getting Approved for a Mortgage
Good credit scores show lenders that you’ll likely make your loan payments on time. For some potential home buyers, this means improving their credit score is necessary before applying for a loan. Superior credit also means better loan terms, such as a lower interest rate that can save you a ton of money over the course of the loan.
Taking Out a Credit Card
Your credit score can have a significant impact on which credit card companies approve you and how many benefits you enjoy. Individuals with good to excellent credit (a score between 670 and 799) will likely be approved for a credit card. Those with excellent credit will likely receive superior perks, such as cash back or zero annual fees.
5 Unexpected Ways Credit Affects Your Life
How can your credit score affect your life? Many people understand that a low credit score may forbid them from taking out a mortgage or a new credit card. However, there are numerous other ways your credit score can affect your daily life and even provide or hinder opportunities.
Before you’re approved to rent a home, a landlord or leasing company may perform a credit check. They want to know if you’re likely to pay your rent consistently and on time. How does credit affect your life? Unfortunately, bad credit could prevent you from renting the home you desire.
Similarly, water, electricity and gas companies may check your credit history before providing their services. Bad credit may require you to put down a deposit or sign a letter of guarantee. Mobile phone companies often review credit history before offering contracts too.
How does bad credit affect your life? Potential and current employers can view your credit with your signed permission. Poor credit could hinder you from receiving a new job or a promotion at your current job.
Checking and Savings Accounts
You may know that credit card companies check your credit score before approving you for a new card. However, banks may also review your credit when you open a new savings or checking account. Having poor credit may lead to checking numerous banks before finding one that works for you.
Your credit score can have a significant impact on how much you pay for car insurance. Individuals with credit scores below 580 will pay drastically more than those with credit scores in the 800 to 850 range. How does credit affect your life? A poor credit score can result in a lot of extra spending.
Understanding how bad credit affects your life may encourage you to take the necessary steps to improve your credit score.
Improve Your Credit Score for a Better Financial Future
Understanding the answer to the question, “How does your credit score affect your life?” may cause you to stress about your score. It’s important to understand that while a poor credit score may seem like a setback, a good credit score can offer many financial opportunities.