When you were offered that credit card back in college (with no job, mind you), all you knew was that it had a $500 limit and that meant you could go on a shopping spree at the mall. What you didn’t realize is that by not paying what you charged on that card, not only did you have to pay the amount you owed plus the card’s interest rate, but also that your non-payment would go on your credit report. Matter of fact, even if the company did eventually mark your expenses as a charge-off, it would still be something that would affect your credit for years to come.
So, if you’ve been wondering if your credit score matters, it most certainly does.
Your credit report (and history) is how people know that you’re responsible when it comes to paying bills and debt. This means that if Equifax, Experian or TransUnion reports that you have less than 700 points (and even that is teetering a bit on the risky side), then they assume that you’re not someone that’s safe to rely on. When a company comes to that conclusion, it affects (some might even say infects) your entire livelihood.
Your credit score affects you when it comes to applying for a loan (school loans, car loans and home loans). If your credit score is low, not only could you end up being denied, but even if you are approved, your interest rate, more times than not, will be uncomfortably high.
Your credit score affects you in getting insurance. After all, why would a company believe that you would pay your current premiums when you still owe on past bills?
Your credit score affects you when it comes to renting an apartment because no landlord wants to worry from month-to-month if s/he is going to get their rent on time. Yes, another thing that can affect your credit score is not just when it comes to paying a bill, but paying it when it’s due.
Your credit score affects your ability to get utilities like electricity, water and cable. Rarely do they deny you completely, but there is oftentimes a hefty security deposit that must be paid.
Your credit score can even affect your ability to successfully apply for a job. Another thing that’s not taught, nearly as much as it should be when it comes to establishing credit, is that a lot of times people don’t realize that it can also speak to your character. When you pay your bills on time, there’s a greater chance that you’ll show up to work on time. When you don’t avoid paying debt, there’s a greater chance you won’t avoid your daily work responsibilities. (Luckily, if you do get the job and a company garnishes your wages to pay a past debt, the Consumer Credit Act protects you from being fired from your job because of it.)
And finally, your credit score can definitely affect your being able to get a credit card (although, ironically, there’s a huge chance that one of those is what got you into trouble in the first place!).
Are these not enough reasons to want to take your credit score seriously? And the best way to do that is to take your bills and your debt seriously. Remember, you’re not doing a company a favor by paying what you owe. You’re actually protecting your financial future.