If you had £1000 spare, would you lend it to someone who always pays their bills on time? Or someone who struggles with regular repayments?
The answer’s almost certainly the person who pays their bills on time because it suggests they’re reliable and you’re likely to get your money back. It’s for this reason that banks and lenders will check your credit score before approving a credit application as your credit score is reflective of how you’ve managed your finances for the past six years. However, did you know that your credit score is used for a lot more than just to approve credit and loan applications?
These are four of the more surprising areas of your day to day life that could be affected by your credit score:
Mobile phone contract
Whether it’s for making calls, checking Facebook or even just looking up recipes for dinner, smartphones have become an everyday item that many of us can’t live without. But did you know that you that phone retailers will check your credit score when you go to take out a mobile phone contract? As the company is giving you the phone and the capacity to use it fully, it’s a form of credit so you’ll often need a relatively strong credit score to be accepted onto some of their best deals.
The best energy deals
The majority of gas and electricity suppliers offer customers a discount if they pay by direct debit as it makes it easier for the company to retrieve the payment. However, new research from credit card firm Aqua has found that three quarters of people don’t realise their credit history can stop them from getting a cheaper energy deal.
While it does depend on what type of occupation you’re applying to or what industry you’re in, a potential employer may want to check your credit file and score before they agree to hire you. This is often likely to happen when applying for jobs in industries such as financial services. Potential employers do this because they may want to confirm you are who you say you are but also, such as in the case of applying to work in financial services they may want to see Make sure what they see is a good reflection of you!
Your dream home
If you are renting, landlords may look to run credit checks on potential tenants as, much like lenders, they’re looking for reassurance that you’re likely to pay your rent on time and a strong financial history and credit score will help with this
If you are looking to buy a house, mortgage lenders will also check the credit records of potential borrowers. So if you have a history of missed loan or card repayments, this could count against you.