Credit Check: Three times when your credit score really matters!

0

How well you do on a credit check can have a drastic effect on your quality of life since credit checks include your credit score. However, most people don’t even know what their credit score is and don’t know how to check their credit. After all, why do I need to know something that is mostly used by insiders at banks?

Credit Check: Applying for a Job

What would an employer want to do a credit check? They don’t lend their employees money! On the surface it does not make sense, but 60% of employers said that they do credit checks on potential employees. For certain higher paying white-collar jobs, this is probably more than the percentage that do criminal background checks. They do it because people with low credit might be more susceptible to either bribery or extortion by a competitor (because they are more likely to be in debt) or because they are seen as more likely to steal from the company.

Although another study showed that neither of these are true, employers use credit checks anyway to determine if you are suitable for employment. That’s why it is a good idea to understand your credit history when you go into an interview so you can anticipate how your employer will view you.

Credit Check: Buying a Car

Credit checks are always used by car dealerships since cars are usually a family’s second most valuable asset. Car dealerships want to know if you are able to afford the car you are seeking to buy and if so, if you will pay it off. If your score’s lower, you still might be able to get a car loan, but you should be prepared to pay a higher percent upfront than if you had a high credit score.

Credit Check: Purchasing a House

Houses are usually a someone’s most valuable asset, so imagine the credit check for owning a house being like the credit check with getting a car loan, but magnified tenfold. These days, home loans usually only require 10% of the total cost of the house upfront, and this amount is pretty standard if you have anywhere near decent credit.

However, in the past it was 25% down and you could still have to use this much cash upfront if you have very bad credit, or paradoxically if you want a more secure loan. Just make sure you do not agree to an “adjustable rate” loan or a loan that is only “fixed” for a certain amount of time: These are almost guaranteed to ruin your credit since the bank can increase your interest rates after you’ve already agreed to the loan!

If that happens, your credit is the least of your worries and you could end up losing your whole house!

LEAVE A REPLY

Please enter your comment!
Please enter your name here