You probably know that if your credit score is relatively low, it will make it harder for you to buy a car or get a mortgage. But these days, there are countless other aspects of your life that your three-digit credit score impacts. From job prospects to student loans, find out some more reasons why you’ll want to keep your credit score high.
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1. Applying for a job. Although the law varies by state, U.S. law permits employers to investigate your credit score before deciding whether they want to hire you. While they do need your written consent, you may want to think twice before refusing, which could keep you from getting the job anyway. Why do employers care about your credit history? It varies based on industry. For example, banks and accounting firms often look at credit history because positions in those fields could lead to the opportunity of fraud and embezzlement. They want to see how responsible you are and how good you are with your money. If you have a low score, that may signal that you have trouble being responsible with credit payments, and employers may dub you a risky hire for the company.
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2. Starting a small business. When you’re looking to start your own business, you’ll likely need to take out loans to fund the startup costs. But banks won’t sign away thousands if they don’t have confidence in your money-managing skills.
3. Obtaining a private student loan. Federally subsidized student loans, like Stafford, Perkins and PLUS loans, do not require your credit score. But for private loans, the interest rate you’ll pay for more than a decade after you graduate hinges on your credit score when you take out the loans. If your credit score is too low, they may keep you from taking out a loan all together.
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4. Getting insured. In many states, home and auto insurance companies use an applicant’s credit history to help determine insurance premiums. Some studies have shown that there’s a definitive correlation between your credit score and insurance risk, according to CreditKarma.com. To keep your premiums low, keep your credit score as high as possible.
Even if your credit history is not as exemplary as it should be, it’s never too late to turn it around. The key ways to achieve a high credit score are simple: Pay your bills on time, avoid carrying a credit card balance, and make regular (and on-time) payments toward paying down your debts as quickly as possible.
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