Credit (an agreement to repay a loan over time) is pervasive in our society. What used to be the exclusive privilege of the wealthy has only in the past half century or so became available to the masses. From buying a home or car to purchasing a burger, shake and fries, credit – whether in the form of a loan and a credit card – has become a familiar sight just about anywhere anything of value exchanges hands.
As credit’s popularity increases, so too do the purposes for which businesses use an individual’s personal credit history as a tool in making business choices. Decision-makers that are influenced to one degree or another by how an individual has used and managed their credit accounts include the following:
- Mortgage Lenders: An individual’s credit history will play a deciding factor in whether the individual qualifies for a loan, what the terms will be, and whether the individual qualifies for advantageous programs.
- Automobile Loan Lenders: An individual’s credit history will play a deciding factor in whether the individual qualifies for the loan as well as what the terms will be.
- Landlords: An individual’s credit history may play a deciding factor in whether the landlord approves the individual’s request for occupancy.
- Employers: An individual’s credit history may play a deciding factor in whether the individual gets a job offer, even if their resume is impeccable and their interviews go flawlessly.
- Insurance: An individual’s credit history can play a large role in determining the monthly premium they pay for their car insurance and/or homeowners insurance. An individual with very poor credit may be denied life insurance all together.
- Utilities and Cell Phones: An individual’s credit history can play a large roll in determining whether the individual can qualify for an account as well as the amount of “security deposit” the company may require.
Components of Your Credit Score: