Updated: Dec 17, 2017
Its safe to say that almost all consumers prefer a high credit score. In most cases if your credit score is 700 or higher you will have access to better interest rates, more loan approvals, and higher credit limits. Even if these reasons do not concern you, having poor credit can hurt you.
1. Car Insurance Premium
If you thought car insurance companies only view your driving record, then your wrong. When applying for auto insurance most insurance companies check your credit report. Having poor credit increases your premium
2. Mortgage Interest Rate
Having poor credit can cost you tens of thousand of dollars more in finance charges on a mortgage loan. According to FICO, the credit scoring company, an individual with a FICO score ranging from 760-850 would pay $1,426 a month or a $300,000 home loan based on a rate of 3.96 percent. A loan applicant with a lower score, from 620-639 , would pay nearly $300 more each month- $1,714 for 5.55 percent loan. If you were to pay the whole 30-year term. that lower credit rating is costing you an extra $103,444 in interest charges.
Can you imagine being denied employment because of your credit report? Well we are here to tell you it is possible. In 2012 the Society for Human Resources Management did a study and found that nearly half of U. S. employers use credit checks on some or all of their applicants. As unfair this may seem, many employers practice this. Some states have laws preventing employers from factoring your credit when hiring, while others have none in place.
4. Credit Card Offers
When applying for an unsecured credit card majority of companies require a credit check. If your credit score is poor or you have some negative items reporting it can affect your interest rate by as much as 20%. For some people a secured credit card is an option. A secured card is require you to put a cash deposit for the credit limit your request. So a secured credit card with a $300 credit limit would require a $300 deposit. These type credit cards are recommended for consumers who need to build credit or have poor credit.
5. Applying For Residential Rental
Residential rental properties are factoring in an applicants credit report when they apply for an apartment or other residential rental property. If an applicant has a poor credit report they can either be denied, or maybe required to make a large deposit, sometimes equal to 2 months rent. This can be a headache especially now that rental properties are charging non refundable application fees in today's market. So definitely ask questions and make sure your credit report is good standing when searching for residential rentals.