You may think that once you’ve secured a mortgage and bought a home, you no longer need to worry about your credit score.
Although mortgage applications are frequently the first time borrowers become aware of it, this isn’t the only aspect of their life that will be affected by the rating. In fact there are a number of reasons to strive for a good credit score.
1. Buying A Car
Many car dealers offer attractive finance packages to help you buy the car of your dreams. But their cost calculations will be based on the assumption that you have a good credit score. Since buying a car is not considered to be a large investment, a poor score is unlikely to stop you accessing car financing. It will, however, hugely reduce your options and prevent you from signing-up for the best deals. You may be charged a higher rate of interest, meaning your monthly repayment figure looks nothing like the affordable sum advertised against the car.
2. Getting A Job
It is becoming increasingly common for businesses to conduct pre-employment credit checks on candidates. This is especially important in roles where the employee will be handling cash or materials of substantial value, or be managing budgets and financial reporting. There are fees associated with the check, so they are usually conducted after the candidates have been narrowed down. So you could make a great first impression, nail the interview and still not get the job based on a history of financial woes.
3. Starting A Business
Got a great idea for a business, but need to borrow a little money to get it off the ground? Your personal credit rating can greatly affect your chances of securing a business loan, even if the business has been created as a separate legal entity.
4. Short Term Loans
A bad credit rating will affect your ability to access short term personal loans, and how much you pay. Often lenders are willing to offer loans, but will charge higher fees, and a higher rate of interest, to those with a poor rating. For this reason it is important that you don’t wait until you need to borrow money before managing your credit rating.
5. Renting A Property
It’s not just owner-occupiers that need to be wary of their credit score. Those who rent their home are also affected. Landlords often perform a check on prospective tenants. If you have a bad rating they may simply refuse to let the property to you, or request several months rent to be paid in advance.
6. A New Mobile Phone
Need a new mobile phone? Fancy the latest model and feel confident that you can afford the monthly bill? If you have a poor credit rating you may be disappointed. Mobile phone providers frequently carry out credit checks to ensure their new customer won’t disappear with their shiny new phone without paying for the contract.
There are so many areas of life that can be affected by your credit score. Ensuring your score is maintained at a good level can help you get the loan, job, home or even mobile phone contract you need, when you need it.
By Harry Price
Harry Price is a freelance writer and artist living on the south coast. In his spare time, he’s a marathon runner and enjoys rock climbing.