It is a common misconception that if you do not have any plan to get a big loan in the next few years, you probably need not be concerned about your credit scores.This is not actually the case.Regardless of whether you have any plan to get a big loan or not,it is advisable that you must keep your credit record free of inaccuracies.You might know that your loans will be affected by your credit score. The higher the score the lower the rate you will get on mortgages, car loans and credit cards. What if you do not have any plan to get a mortgage or car loan? In this case, does your score matter? Yes, it does matter.
Four unusual situations where the bad credit or an inaccurate report is likely to harm you are discussed in detail below:
Prospective Employers:
Employers,while making decisions about your hiring,firing and promotion, may make inquiries into your credit report.If you have bad credit score then it is most likely to leave a bad impression on your employer and may affect your career.
Federal law gives you protection against the adverse decisions that the employer may make against you. You will be immune to such adverse decisions only if you file bankruptcy (Title 11, Bankruptcy, of the U.S. Code), otherwise every other negative item may be used against you. If you are a loan defaulter or you have missed a payment of your loan then this puts you in a vulnerable position. In this case the employer can use that information against you. It is known that government runs routine background checks on your personal records like criminal history and credit history. If you have a low credit score then this may weaken your position. Such a person could be considered a potential security risk because, due to his financial constraints, he is more likely to be bribed or may easily be exploited. Credit history information may help establish the credibility of a person.
It is most commonly used for sensitive positions and those that deal directly with money. Your credit history may also help confirm other facts that you presented about yourself. For example, if you said you spent five years working for a firm in New York but your credit history does not confirm that you ever took up residence in New York, then it is a matter of great concern for you and you could be in a serious trouble. Such contradictions in your credit history information need to be rectified on priority basis.
Landlords:
This case is little less common because landlords routinely run checks on your credit history information.Your credit history information helps them establish your financial credibility.It portrays to them a complete picture of your financial dealings with others.Looking at your credit hostory information they may easily assess financially how trustworthy you are and how good you are in meeting your financial commitments like paying your monthly rent on time. Your credit history information is a record of all your late payments and evictions. These are the two categories landlords are most concerned about. It also portrays a good picture of renter’s debt burden and debt profile. This can help a landlord decide which renter may be a pain in the neck and which renter is most likely to cause very little troubles.
Insurance Companies:
For evaluation of your premium ,insurance companies rely on your credit history information.Their actuaries have experienced that a person with low credit score is most likely to make higher claims on insurance. There are theories that support the truth of this proposition. Apart from this statistical data also supports this policy. The lower your score, the higher your premium will be. This proposition applies to all sorts of insurance policies from auto to home to renters. This policy will also apply to medical facility if you seek out independent health insurance. If you avail yourself of medical facility through your employer then this policy is not applicable to this particular case, because as an employee you are treated as part of a “class”, rather than an individual.
Cell Phones:
Cell Phone companies also rely on your credit history information while offering you service. If you have a bad credit and want to get a cell phone connection, you may be surprised to learn that the cellular company will demand you to deposit some amount as security before they could offer you service. With bad credit history, you will also have no access to a great many special offers and free equipment that many companies offer for a new customer. The reason companies do this is because your bad credit history leaves a very bad impression on them and this reflects to them that you are not good in meeting your financial commitments on time and are most likely to delay payments of your phone bills.Cell phone companies actually offer you a month’s service on credit for which you are supposed to pay ate the end of the month.If you have a low or bad credit then you are not considered creditworthy person. This may develop a trust deficit between you and your cell phone company. So you are not expected to pay on time and that’s why the cell phone companies demand a deposit. This explanation holds true for other monthly service providing companies like cable television and internet service.
Conclusion
From above discussion, it may easily be concluded that your credit history information and your credit score are likely to affect all aspects of your life even if you don’t have any plan for getting a loan. Therefore, it is deemed seriously important to regularly check on your credit history and your credit score. If you see some inaccuracies in your credit history, you are advised to rectify them at your earliest convenience. The only place where you can get a free copy of your credit report is at www.AnnualCreditReport.com. This is a government sponsored website and offers free credit history information.
