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Financial Guidance Library

Helping others achieve financial success

Financial Guidance Library

Do Credit Scores Matter in Today’s World?

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In today’s world, your credit score drives everything. This top secret score can be the determining factor on several things, such as job opportunities, utilities, insurance premiums and most important, interest rates. The people looking at your score view it to see just how trustworthy you are and your ability to handle responsibilities.

Job Opportunities
A low credit score can cost you a job. Most employers now review your credit and use it as a factor in determining your accountability and how you handle your liabilities. Sometimes showing financial stress can relate to the quality of work you may provide.

Unfortunately, sometimes bad credit is due to a misfortune, such as being unemployed and not having the income to pay your debts. If you currently are unemployed and looking for a job, remember to work with your creditors on your outstanding debts. Remind your creditors that your credit score is a factor for obtaining employment and if you can’t get a job because of your score then they will never get their money.

Utilities
Good credit scores will help to waive deposits and may give you a better plan for a better price. If you have bad credit they may require you to pay a large deposit or may even deny you service.

Insurance Premiums
Whether you are looking for vehicle insurance or homeowners insurance, a low credit score may cause you to have a higher premium or may cause you not to be eligible for insurance. Maintaining a high credit score will not only get you a better rate but may even qualify you for additional discounts.

Another important reminder – insurance companies also are known to check your score when your policy is up for renewal, not just when you buy the insurance.

Lower Interest Rates
Having a higher credit score can put more money in your pocket. Here is an example:

Credit Score 542 751
Loan Amount $25,000 $25,000
Term 60 months 60 months
Rate 15.95% 4.75%
Payment $612.37 $470.11
Total Payments $36,742.01 $28,206.31

With the higher credit score you are saving an additional $8,535 in interest.

You need to keep your motivation high when it comes to your credit score. Focus on improving your credit score by making sure your credit report is correct and dispute any information that is invalid. In order to avoid any unexpected surprises, check your credit report at least once a year.

If you are unsure how to read your credit report or need assistance improving your credit score, stop by and ask for assistance. Don’t be bashful as your credit score is an important factor in today’s world and it can be the deciding factor in areas outside of loans.

Jennifer Panther is a certified financial counselor.