Adequate insurance coverage is the foundation of a sound financial plan. No matter how well your investments perform, an unforeseen emergency such as a fire, theft or natural disaster may leave you completely unprepared not only to meet the financial needs of your retirement, but your immediate needs as well.
Unexpected Ways Your Credit Can Affect YouSubmitted by The Participant Effect on August 12th, 2019
A credit score is assigned to you by each of the three major credit reporting agencies. The most common is the FICO score. Calculated based on the information in your credit report, it’s purported to measure your overall credit worthiness. FICO scores range from 300 to 850 — the higher the better.
Whereas a higher FICO score means greater access to credit products, lower interest rates and preferential lending terms, a low credit score can be an obstacle to obtaining a car loan, mortgage or credit card. But there are a number of other ways your credit score can affect your life that you may not be aware of.
Getting a job. Employers are permitted in many states to use the information in your credit report when evaluating you for a potential position. A good report can signal to an employer a desirable level of financial and personal responsibility.
Renting an apartment. Landlords can also consider your credit as part of their evaluation when they decide who to rent their property to. With a lower score, you may still be offered the apartment, but have to pay a higher deposit in order to move in. Getting a cosigner and letters of reference may also help if you have poor credit.
Automobile insurance. In many states, carriers can use your credit score to determine how much you’ll pay in premiums to insure your car. Those with lower scores can end up paying significantly more to insure the same vehicle.
Setting up utilities. When you move into a new home, you have to establish electric, water and other utilities. Sometimes, a good credit score can earn you a pass on having to put down a deposit for these services, while those with lower scores may have to pay more upfront to turn the lights on. This can also occur when you purchase a new cell phone plan.
Refinancing an existing mortgage. Much as when you try to qualify for a new mortgage, your lender will evaluate your credit score and credit worthiness when refinancing your home. So if you’re hoping to do a cash-out refi to make home improvements, or just lower your interest rate, you’ll have a better chance of a better deal with better credit.
Hopefully it’s clear by now that your credit can affect your life in a number of ways. You should aim to maintain good credit and repair bad credit when necessary. But first you have to read your credit report. Fortunately, there’s a way to do it online that’s completely free. If you visit annualcreditreport.com, you can request a copy of your credit report every 12 months from each of the three major credit reporting agencies: Equifax, TransUnion and Experian.
Once you receive your report, review it for any errors. Consumer Reports says that 10 million Americans have mistakes on their report that could lead to denial of credit. So you should dispute any inaccuracies with all agencies whose report contains an error.
Your credit report and score are increasingly being viewed as a barometer of overall financial wellness. This isn’t always fair, as report blemishes can result from circumstances beyond the consumer’s control, such as a medical crisis, and result in far-reaching financial consequences. Nonetheless, it’s important to do what you can to monitor your credit score, maintain good credit and improve it when necessary.