While you might think of credit scores as the make-it-or-break-it measure in qualifying for mortgages or car loans, they also an impact in other areas of your life as well. Here’s a look at some lesser-known ways a bad credit score or spotty credit history can end up costing you more money.
Rental applications: Many landlords and property owners ask for your financial information to prove that you’re a reliable tenant that can make rent payments on time. Often they will do a credit check, although some settle for proof of income or previous rent payments with another landlord. While there’s no agreed upon standard by which you might be rejected for an apartment, one study suggests that a score lower than 600 can put your rental application at risk.
Car insurance rates: In almost all states, car insurance companies can use your credit score to determine your insurance rates. As Value Penguin reports, for the same type of insurance, having a poor credit score can cost you nearly double the amount you’d pay with a good credit score, for an average total of $2,940.
Utilities: Gas, electricity, and water companies will check your credit before they let you sign up for their services. In rare cases they might deny you service for having a poor credit score, but they’re more likely to insist on either a deposit or a letter from someone who will agree to pay your bill if you don’t. If you are being threatened with a shutdown of services, you do have some options through your state or local consumer protection office.
Wireless phone plans: As with utilities, a phone company can insist on a deposit or put you on a prepaid plan if they don’t like your credit history.
Getting hired: Sometimes (but not always) an employer will do a background check that can include a look at a summary of your credit history (although they can’t see your actual credit score). This is more commonly done if you are expected to handle money as part of your job, but it’s possible that they’ll reject you based on your credit history. If they do so, they must notify the applicant and allow for them to appeal the decision (since your credit history can include fixable errors).
A poor credit score can be costly, but the good news is that most blemishes in your credit history will drop off your record after a few years. With good credit behavior, your credit score will improve. For more information on improving your score, check out this Lifehacker post.