6 Consequences of a Low Credit Score

Your credit score is a single number that can make or break the quality of your life—from renting an apartment and qualifying for a mortgage to getting approved (or denied) for a new job and finding attractive home and auto insurance rates.

Therefore, it's important to know what factors go into that three-digit number, how you can improve your credit score, and what you can do to protect it. Here are six ways your credit score impacts your life:

1. Housing Costs

You have probably seen advertisements for houses or apartments that either say "credit score required" or ask you to "call for credit score requirements."

That's because landlords want to know if you are reliable with your monthly payment. They will look at your credit history to see how often you have made payments on time, how much of your available credit you have used, whether or not you owe any money to collection agencies and other factors.

2. Employment

Your credit score is a numerical representation of your trustworthiness. A credit score helps employers determine the likelihood that you will repay future debts. Some employers even ask for access to candidates' credit reports during the hiring process.

3. Utilities

Utilities like electricity, gas, and water require a deposit upon installation. Your credit score is often used to determine how much of a deposit you will need to pay because it acts as an indicator of how reliable your monthly payments are. If you have good credit, you will likely be able to secure lower deposits for these utilities.

4. Credit Cards

Having a good credit score will allow you to get approved for the most attractive interest rates and terms when you apply for a new credit card or loan. However, it's important to note that there are many factors outside of your credit score (like income levels and employment history) that go into determining if you get approved for new credit.

5. Car Buying

Like landlords and employers, car dealerships also use credit scores to predict if you will make your monthly payments. A good credit score can help get you approved for an auto loan at a better rate than someone with poor credit.

6. Student Loans

Federal loans for higher education are typically issued without regard to credit history—but private student loans may look at your credit score as part of the application process.

In some cases, a good credit score can help you secure lower interest rates on those private student loans—and a bad credit score could result in a denial or higher interest rates.

Conclusion

Your credit score has the power to impact every facet of your life—from buying a home and getting a job to paying for utilities and obtaining a student loan.

Improve your credit score by making all of your monthly payments on time, keeping low balances relative to your available credit, and avoiding opening up any new lines of credit before you need them.

For more information on your credit score and how to improve it, visit National FCG today!