Your credit score matters when you apply for a credit card or make a big purchase, such as a new home or car. But did you know that your credit history is also a factor in everyday situations, such as renting an apartment, signing up for utilities, or even getting a new job?
Here are a few myths and mythbusters regarding ways in which your credit score and borrowing history can impact your daily life.
MYTH: I don’t need to be concerned about my credit when filling out an apartment rental application.
BUSTED: As many as 65 to 70 percent of landlords may pull the credit report and credit score of a potential tenant. Landlords can use your credit report to find out if you have missed payments, have delinquent accounts, or have been evicted in the past.
Some credit mistakes factor more heavily than others. For example, a landlord may be more lenient about issues related to medical bills or student loans but will likely notice if you have missed rent payments or a bankruptcy in your credit history.
If your credit score is on the lower end of the credit score rating scale (between 280 and 659), your apartment application could be rejected. If you are concerned about this possibility, you may want to acknowledge the issue beforehand and offer to pay the first month’s rent (as well as the security deposit) in advance. Providing proof of your income may also help to convince a wary landlord.
If a landlord turns you down for a rental based partly on information in your credit report, he must provide you with an “adverse action” notice that includes the name and contact information of the credit reporting agency (CRA) from which the landlord received the credit report. You have the right to a free report from whichever CRA is indicated in the notice.
After you receive the report, review it to determine what information may have caused your rental application to be denied.
MYTH: My credit score won’t affect my ability to secure utility set up in my home or apartment.
BUSTED: Once you have your apartment, you’ll need the lights, gas, and water turned on. Just like other creditors, utility companies will ask for your Social Security number (SSN) to check your credit report and payment history.
A poor credit history may make it more difficult for you to get services. You may still be able to get the water running, but you may face putting down a large deposit in addition to your regular monthly bill. The company may also ask you to provide a letter of guarantee from someone who agrees to pay your bill if you do not.
MYTH: I don’t have to worry about my credit score impacting my ability to sign up for a cell phone plan.
BUSTED: You may not think of a cell phone as having the same prerequisites as a mortgage, but a poor credit score can still impact you when you are signing up for service. In fact, two of the major U.S. networks currently have strict credit requirements for their two-year contracts. Additionally, many of the special deals that are advertised for the newest cell phone models are only available to consumers with excellent credit scores.
Similar to landlords and utility companies, cell phone companies want to see how you’ve handled your payments in the past because it is an indication of your future behavior. Even the cell phone companies that are relaxing the credit requirements still want to see that you’ve paid your bills for a full year before they’ll qualify you for a phone.
MYTH: My employer or potential employer won’t be able to access any of my credit history information.
BUSTED: Federal law allows potential and current employers to view a modified version of your credit report for hiring and promoting purposes. Some industries such as financial services and healthcare take advantage of this more frequently because of the sensitive nature of their employee access.
If a prospective or current employer plans to pull your credit report, it must obtain your written consent. If you do not get the job or promotion because of information found in your credit report, the employer must provide you with the credit report and a “Summary of Rights” that tells you how to contact the company that provided the report. You have the right to dispute the accuracy or completeness of any information in the report and to get a free additional report from the CRA that supplied it, if you request it within 60 days.
To monitor how your borrowing habits are impacting your credit score, you can request a free credit report online every 12 months from each of the three CRAs through AnnualCreditReport.com.
Author Blurb: Diane Moogalian is vice president of operations for Equifax Personal Information Solutions. Prior to joining Equifax in 2007, Diane held several strategic roles with leading financial services companies.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.