6 ways a great credit score can improve your life
By Dawn Papandrea
October 21, 2014
Most people know that having good credit can get you a better interest rate if you're in the market for buying a new home or car.
But there are lots of other areas of your life for which having a stellar credit score could mean the difference between getting what you want or having to settle for something less.
Take a look at some surprising ways a great credit score can improve your life:
1. You'll be less anxious and irritable regarding money decisions. Are money problems keeping you up at night? “Greater debt leads to greater money anxiety,” says Dan Geller. A behavioral finance expert and author of “Money Anxiety,” Geller says that although that connection might seem obvious, there is an underlying issue at play. “Uncertainty is the root cause of the anxiety,” he explains, namely, not knowing when or how you'll ever be able to pay off your debt and regain your financial footing.
Since your credit score is essentially a report card on how you manage your financial life, it stands to reason that making improvements in that area can have a strong psychological impact. “Your credit score is a reflection of who we are now,” says Geller. “We feel better about ourselves when the credit score is adequate, and when we feel we will be evaluated favorably.”
2. You can drive a cooler car. A strong credit score gives you access to the things you want in life, says Ken Chaplin, senior vice president of TransUnion Interactive, one of the three major credit bureaus (along with Experian and Equifax). That can include qualifying for an auto loan or lease on a reliable vehicle versus driving a more run-down car.
3. You can pay less on your house. Don't think that just because you're a homeowner that you can become lax when it comes to your credit standing. Just ask anyone who has tried to refinance his home over the past couple of years to take advantage of record low interest rates. “Credit scores remain a major factor for refinancing,” says Doug Lebda, CEO of LendingTree. “For borrowers who have improved their credit and built up equity in their home, they may be able to refinance at a lower rate down the line, so it remains incredibly important to maintain and improve credit scores, not only from a mortgage standpoint, but for all loan types,” he says.
4. You can end up on the short list for that dream gig. It may not be entirely fair and there's some debate in some states as to its legality, but more employers are using credit scores as a job candidate evaluation tool. “Some employers do feel that how one manages their own personal finances could be indicative of how they may be trusted with money for the company,” says Chaplin.
Beyond your handling of money, employers may also look at your score as one criterion for evaluating your character, adds Geller. You already have enough anxiety if you're looking for a job and have bills to pay, he says, so if you at least have a respectable credit score, it's one advantage you know you'll have over your competitors.
5. If you're dating, good credit is another check in the awesome column for you. It might not sound romantic, but credit scores are making their way into dating dialogue nowadays. “People will ask early on, 'Hey, how's your credit score?' To a potential suitor, a good score shows that you're living within your means, you are someone who's responsible, who's committed, and who pays back debt,” says Chaplin. Even more important? It confirms that you won't be bringing any financial baggage into the relationship if you decide to move to the next level.
6. A way nicer apartment can be yours. Lots of landlords use credit scores and credit reports to screen prospective tenants, says Chaplin. “In very competitive markets in which you're up against a lot of people, you want to look the best to that landlord, and having a good credit score makes you look the best,” he says. When it comes down to it, property owners want someone who is going to be able to pay that monthly rent, and a strong credit score is a predictor of that.
As a nation, we like to quantify ourselves, points out Chaplin, whether it's how many Facebook friends you have or how many steps are recorded via your fitness monitor. “Credit scores are just another numerical indicator of who you are,” he says.
The good news is even if you've made mistakes or had some bad financial luck in the past, you can always strive to make improvements to your score and, in turn, be able to reap the benefits and rewards that follow.