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The recent recession has given rise to a backlash against credit. And it is true that an irresponsible use of credit, especially credit cards, can lead to financial ruin. For some, it might make sense to do away with the temptation and have done with credit altogether. It’s a nice thought, but if you aren’t maintaining your credit score, you might find yourself paying for it in unexpected ways.

 

You already know that your credit score is a Big Deal when it comes to how lenders view you. Your credit score has to pass muster in order for you to get a loan to begin with. Then, your credit score is what lenders use to determine the interest rate you pay. The lower your credit score, the higher the interest rate — and the more money you pay over the life of the loan. Many figure that they can save up enough cash to buy most things (except a home), and that once they have a home, there is no need to worry about a good credit score. Unfortunately, this isn’t true. Here are 3 non-lending ways your credit score could be costing you:

1. Insurance Premiums

Many insurance companies now pull your credit score in order to help determine your premium. Credit scores are used to help determine the likelihood that you will put in a claim. For auto insurance companies, there is an increasingly assumed correlation between how responsible you are with your finances and how responsible you are likely to be on the road. While your credit score isn’t everything for setting an insurance premium, it is becoming a prominent factor. I save $15.00 a month on my insurance because I have a good credit score. While it doesn’t seem like much, if you consider the savings over the several years that I will be paying premiums, it really starts to add up.

2. Employment

If you have a poor credit history, especially if you are applying for a sensitive job, employers may worry that you could be susceptible to the temptations of taking bribes and embezzlement. Even though employers aren’t supposed to look at your score, they can get a pretty good idea of what your score might be by looking at your credit report. My brother-in-law was rejected for a job as a security guard because of his poor credit history. Even if you aren’t in a particularly sensitive position, employers may be concerned that showing an irresponsible bent with your finances could translate into poor work habits. An employer can’t just pull your credit report without your authorization, though. However, if you are unwilling to allow a credit check, an employer may decide you aren’t worth the risk.

3. Landlords

If you are looking to rent, you might be rejected on the basis of your credit. Landlords like tenants who pay on time, in full, and don’t make trouble. Your credit history might indicate that you have trouble paying on time, and could signal potential problems. Many landlords who rent to those with lower credit scores require larger up front security deposits, or may insist on first and last month’s rent up front. The cost of moving is expensive enough without having to add a premium due to a low credit score.

Bottom line: Your overall financial reliability is becoming increasingly connected to your credit score. Even with regard to items that are not directly related to loans, your credit history is used for decision making. This means that it is worthy of your attention, and that improving your credit score should remain a priority.