It’s easy to say that you needn’t worry about your credit score. After all, it’s just another number that some people tell you to worry about but ultimately seems inconsequential in the short term, like your blood pressure or your weight. Just like these health figures, though, your credit score can actually impact much more than meets the eye. You already know your credit score’s effects on your ability to secure a loan and how much interest you’ll pay on it. But a good credit score can also make it easier to find a job, move into a new apartment and even help you find love – seriously. These are just a few interesting ways that your credit score impacts your life.
According to a survey of employers conducted by the National Association of Professional Background Screeners, about 31 percent of businesses conduct a credit check on at least some applicants in consideration of employment, while 16 percent conduct a credit check on all applicants. While the study showed this number has been in decline for some years, it remains an issue for prospective job seekers. According to some, it is a real problem, big enough that the government may work to outlaw it.
Senator Elizabeth Warren (D-Massachusetts) recently proposed legislation in U.S. Congress that would amend current laws to prevent employers from using poor credit to disqualify candidates. Introduced as the Equal Employment for All Act of 2015, the bill is currently awaiting review in a congressional committee. For now, however, credit checks remain a real concern for those hoping to find a new job. According to a survey from policy think tank Demos, as many as one in four job applicants1 said he or she had been subjected to a credit check when applying for a new job.
While the morality of these checks remains up for debate and may change depending on the success of new legislation, maintaining good credit is still a priority for those seeking employment. If you are considering applying for new jobs but have poor credit, work to improve your score, or at least take steps to ensure it doesn’t go any lower. Don’t keep a high balance on credit cards if possible, and make sure not to apply for any new cards for a few months as you search for jobs. Take time to get your free annual credit report and dispute any errors that may be on it.
Renting with bad credit
While the validity of checking a prospective employee’s credit may be up for consideration, one credit check that’s likely not going away is one from a future landlord. If you’re looking to rent an apartment, chances are you will have to pass at least a basic credit check. According to a study from credit agency TransUnion, at least half of all landlords2 will run a credit check on new applicants before offering up a lease agreement. And as more people opt to enter the rental market, a good credit score may matter more than ever.
The good news is, in the case of landlord credit checks, they tend to be more general than one for a loan. According to NerdWallet, property managers also tend to be more forgiving3 as they usually aren’t looking for perfect credit. Most landlords simply want to know if an applicant has any major red flags on their credit report, like a charge back on a credit card or past bankruptcies. That’s why many will use a service that only tells the landlord if the applicant’s credit is above a certain range, usually 600 or higher. With a decent credit history and no major loan defaults, most applicants will be in the clear.
For higher-end properties, a more pristine score may be required, according to NerdWallet. But many property managers are willing to negotiate when it comes to these issues. Being upfront and honest about any credit blemishes is the best way an applicant can prove to a landlord that he or she doesn’t represent a huge risk. In this way, credit checks for apartment leases may be less of a headache than other circumstances.
Your relationship with credit
Research from the Federal Reserve Board has even found correlation between good credit history and lasting romantic relationships.4 The report found that people with higher credit scores were more likely to form and maintain long-term relationships. In addition, couples were more likely to stay together if their credit scores were similar. The researchers found that the bigger the difference between credit scores, the more likely a couple would separate within five years.
Clearly, a credit score is more than just a grade on how often you pay your bills. Employers, landlords and even future spouses may use your financial aptitude to assess your overall trustworthiness. If that isn’t enough incentive to maintain a good score, be careful.
The views expressed by the articles and sites linked in this post do not necessarily reflect the opinions and policies of Cash Central or Community Choice Financial®.
1Traub, Amy. (2014, Feb 3). Retrieved from: https://www.demos.org/research/discredited-how-employment-credit-checks-keep-qualified-workers-out-job
2Transunion. (2014, May 12). Retrieved from: https://newsroom.transunion.com/transunion-reveals-almost-half-of-landlords-consider-renters-credit-health-as-a-key-factor-in-leasing-decision
3Jayakumar, Amrita and Tsosie, Claire. (2022, Feb 3). Retrieved from: https://www.nerdwallet.com/article/finance/landlords-credit-check
4Dokko, Jane, Hayes, Jessica, and Li, Geng. (2015). Retrieved from: https://www.federalreserve.gov/econresdata/feds/2015/files/2015081pap.pdf