Credit 101 what you don’t Learn in School

We have all heard the advice about our credit scores and history and how they affect almost everything we do from a financial standpoint. But, did you know that your credit score is used in other ratings systems that determine what you pay or if you are eligible for services? It is true; you can be paying more than you otherwise would with a higher score.

Insurance companies. When you apply for insurance, it is likely that you will have a credit check run on you to determine how you pay your bills. If you have a low score, you might be rejected for coverage. But, more than likely, you will be relegated to paying higher premiums in order to mitigate the risk of you as a customer and not being responsible in paying your debts on time. At the very worst, you will have to pay your premiums either one year or six months in advance and then the payment plan that you are placed on will be to finance the next term.

Rental properties. Landlords are more careful than ever in whom they allow as renters because of the financial risks imposed when having to evict or collect back rent. It is an ugly business in which to be, but rental management companies are forced to do what they can in order to insure solvency. Plus, the one month security deposit is no longer much security.

Employers. If you are attempting to obtain a job at a company or industry in which there is significant risk because of working with money directly, you might find yourself as a subject of a credit check. These companies are trying to protect against those who might be high-risk for theft due to financial distress. Sure, this could fall under the category of ‘profiling’, but it is not illegal and so probably will continue unabated.

Notification of a credit check is mandatory. Whichever circumstance you find yourself, you must be notified that a credit check is being run on you. If you are not, then you have grounds for a lawsuit. It is a federal law which is being violated and you do have rights to protect against illegal access to your personal information.

Here is a question that has yet to be answered: can you negotiate a lower rate (on your insurance, for example) if your credit score rises while you are a customer of certain financially based companies? Probably not, but it would never hurt to ask, especially if you have built up a track record of paying your bill on time. When you perform in a responsible manner, you should expect some type of reward if you were penalized in the beginning of the relationship.