In different situations, our daily life can be severely affected by the credit. Credit may also influence our homeownership and employment. In this post, we’ll focus on when and how credit affects our lives. You can enhance your creditworthiness for getting help for different purposes like seeking apartment, job applications, searching for insurance policies, opening a new utility account and many others.
1. In case of apartments and rental home
A rental agent or a prospective landlord will definitely review your credit report. They are basically interested in seeking any common pattern in your payment history. Those patterns can be missed payments, any errors or negative items in your credit report. If there is any, it’ll indicate that you’re not doing your responsibilities properly as a tenant. If you have low or bad credit, while co-signing a loan, you’ll need to put a big amount as downpayment. If you apply for a rental housing, it can also be rejected. In addition, whenever a third party (a lender or rental agency) fetches and reviews your credit report, your credit scores can be affected badly every time. So be cautious about applying for such loans to all the resources at once.
Normally, if you are paying rent on-time, that doesn’t mean it will help you to grow your credit. It is because rent payments aren’t reported to credit reporting agencies. But things are changing now, several property management agencies and landlords put a positive note for considering positive rental history, which eventually push your credit to grow. Ask your landlord to avail such service that can enable you to pay your rent online. Your rent payments can then be reported to your Experian credit report via Experian’s RentBureau.
2. In case of an auto loan
Your credit score definitely affects auto loan rates whenever you apply for it. Most auto loan lenders consider only your credit score, they don’t check your full credit report or full financial history. If you have a high credit score (750+), the best loan deal will be available to you. However, even people with low credit scores can get the approval for an auto loan, usually though at very high interest. Perhaps it’s best for you to limit your loan numbers, as inquiries from auto loan applications can hamper your credit score.
3. In case of a cell phone connection
Cell phone companies are now verifying the credit score before giving any new connection or providing you a new service plan. People with damaged credit may have to put a good amount of money as an advance for a service contract. But there are several more cell phone services who doesn’t require a credit check. If you check carefully, you’ll notice that some cell phone companies are putting a clause in their contract, through which they can review your credit report at any point of time. You must remember that a cell phone application inquiry may lower your credit score, as it’ll appear in your credit report.
4. In case of a checking account
Banks will not review your credit report while processing the checking or savings account application. However, most banks will check and verify your ChexSystems report before approving your application and create a new account for you. ChexSystems reports are created totally based on your bounced checks or other banking negatives.
5. In case of credit cards
When you apply for a new credit card, the credit card company will surely check your credit report and review your score. Through this they will determine how much credit they can possibly allow you, or is it ok to approve your application or not. Different credit card companies have their separate terms and regulations. Secured and prepaid card companies allow such borrowers who have low credit. Credit card companies can also change your credit limit at any point of time by reviewing your credit report.
6. In case of insurance policy
Home and auto insurance companies normally consider consumer credit information with your application information while approving rates and terms. As per general statistics, more than 90% of auto insurance companies check credit reports while insurance approval. The reports and scores are normally different from what is used in case of credit cards. But your basic data and standing remain same. The insurance company will fetch your credit report for calculating “insurance risk score.” High score applications will get better insurance rates. This inquiry will appear on your credit report but not harm your score.
7. In case of mortgages
Mortgage lenders will definitely check all three of your credit reports and credit scores. Normally a mortgage is much bigger than a student loan or auto loan, so lenders perform a detailed review. You must have a credit score above 700 to get a standard mortgage interest rate. This credit inquiry will appear on your credit reports and can harm your credit score deeply.