Understanding Credit & Debt
How Your Credit Score Affects Your Life
Financial History Can Affect Your Job, Lease or Loan Rates
When you think of the key components that make up your financial life, you may first point to income, savings, assets and liabilities. But what about your credit profile, including your credit score and report? Did you know that credit can make a tremendous impact on your finances, as well as your overall quality of life?
Your credit score matters for several reasons.
For one, it determines your eligibility to attain new credit for goals ranging from buying a home to starting a business. A high score can increase your chances of qualifying for a great loan with a low interest rate, while a poor number can do just the opposite and prove costly over time.
The phrase "credit score" can mean different things at different financial institutions. Some assess your creditworthiness with the FICO® score, while others measure it in other ways. You can get your FICO score from a number of sources, including from Chase if you have a Slate credit card. If that score is below 700, it's worth it to take some time to improve it. Start with paying all of your bills on time and reducing any significant credit card balances to lower your overall credit utilization.
A clean bill of credit health does more than just expose you to the best borrowing rates and terms. It can mean the keys to a new apartment you want to lease. Some landlords will want to review your credit as part of the application process. Bad credit may suggest you shouldn't be trusted to make rent payments on time.
It's not uncommon for credit to play a role in the modern day job hunt, either. An increasing number of prospective employers, especially those in the finance industry, pull credit reports (with the applicant's approval) as part of the vetting process. As credit reporting agency Experian explains on its website, "credit information provides insight into an applicant's integrity and responsibility towards his or her financial obligations." If you know you have some stains on your credit report, it's best to be upfront with the hiring team and explain the steps you're taking to improve your credit health.
Finally, credit can play a role in determining rates you pay for insurance, cable and utilities. According to the Federal Trade Commission, like other creditors, these types of companies may request your Social Security number to access your credit profile. A positive credit history may make it easier to get these services because it is an indication that you are financially responsible and have a good track record of paying bills on time.
Learn how Chase Slate can help you better understand your credit health.
The opinions stated are those of the author and are not necessarily the opinions of Chase.
FICO® is a registered trademark of the Fair Isaac Corporation in the United States and other countries.
Photo: iStock/PeopleImages | Farnoosh Torabi is an award-winning journalist, author, television personality and personal finance expert who provides financial education for Chase Slate.