A credit score is a three-digit number that says a lot about your financial situation. It measures your reliability with paying your financial obligations. Whether you have a good credit score or one that needs improvement, you need to understand how a credit score could possibly affect your life and everyday activities.
Difficult to Get New Credit
A credit score can affect your ability to get new credit. A low score makes it more difficult to get new credit. A low credit score may also cause you to receive higher interest rate quotes, which costs more over the course of a loan. If you have top-rate credit you'll commonly get better offers for new credit arrangements.
Insurance Premiums
When you call an insurance company to get a new policy, the insurer may include your credit score in the decision regarding the premium. A low score equals a higher premium rate and vice versa. So for instance, if you are securing a car policy, even if your driving record is clear you could still end up paying more expensive rates than a similar applicant with a better score.
Employment
A potential new employer may check your credit during the hiring process. When evaluating a potential candidate, employers want to hire people who are reliable and who will meet their obligations consistently. A poor credit score indicates poor management of personal finances. While a bad credit score may not disqualify you from a position, it could cause an employer to choose another applicant with a more responsible financial history.
No Effect?
For some people, a credit score does not have much of an effect on their lives and everyday activities. Many people choose to pay off their debts, live a cash-only, credit-free lifestyle and do not need to worry about applying for a new job or insurance in the near future. In this case, you do not need to keep tabs on your credit score and you do not need creditors to investigate your credit history.
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