5 Surprising Times Your Credit Matters

“I DON’T CARE what my ‘credit score’ is,” one of our readers wrote in a recent comment on the Credit.com blog. “I am debt free except for my house. I use credit cards for everything possible and pay them off in full every month.”

Is good credit really that important? Some people obviously don’t think so. But maybe it should be. Even if you don’t plan to borrow, there are times when good credit can be a time-saver, money-saver or even a life-saver. Here are five surprising times when your credit matters.

1. Getting Cable Hooked Up

Planning on switching cable providers? Or getting service for the first time? In most cases you can expect a credit check when you get cable. Similarly, most cellphone providers will also check credit unless you are signing up for a prepaid cell phone plan that doesn’t require this. Although these companies aren’t extending credit in the traditional sense, they are providing a service that you will pay for later. And they want to make sure that if you run up a huge cell phone bill or a large cable bill (a movie rental marathon perhaps?) that you won’t skip out on the bill. Bad credit won’t usually get you turned down for these services, but if you have poor credit you may have to place a deposit before you can get an account.

2. A Roof Over Your Head

Landlords will almost always check credit before renting a home or apartment. Like utility providers and cable companies, they are primarily interested in finding out whether you have had problems paying other bills. But a lack of credit history can sometimes be a problem, too.

Homeowners shouldn’t think that they are off the hook here. Your situation could change – you need to move for a job or to be close to an ailing relative for a while, for example – forcing you to rent for a year or two. Or your home could be damaged in a flood or other disaster, and should that happen, you will want to avoid complications when your credit report and/or score is requested by a future landlord.

3. Applying for Insurance

Whether you are applying for or renewing your homeowner or auto insurance policy, it is likely the insurance company will request what’s known as an “insurance-based credit score,” a version of credit scores designed to predict your likeliness of filing a claim. You may not get the best discount available on your car insurance due to your credit score, if your score isn’t high. That’s true even if you have plenty of money in the bank and have never filed a claim before, since those factors don’t affect your credit scores.

Here’s another way credit is tied to insurance: If something does happen and your home is damaged in a disaster, for example, you may have to make emergency repairs before payment from your insurance company comes through. Do you really want to worry about how to pay for those while you’re under that kind of stress?

4. They’re Called Emergencies for a Reason

You know what they say: “Life is what happens while you are making other plans.” You can have plenty of money in the bank and feel financially secure, but an unexpected illness or accident can force you to borrow when you hadn’t planned to. If that happens, good credit will allow you to get a personal loan or other financing at a low interest rate, so you don’t pay any more than you absolutely have to. Qualifying for a lower interest rate can save you thousands over the life of a loan, and you can crunch the numbers on the lifetime cost of debt calculator.

5. Landing a Job

Employers often check credit reports (not credit scores), trying to find out whether there are credit problems that might make an employee a hiring risk. While the practice of employers obtaining credit reports is controversial, it’s currently legal in all but 10 states (and in those states it is typically legal, but restricted to certain situations).

You won’t likely lose a job over a lack of credit, but a mistake on your credit reports could create problems. Furthermore, if you don’t care about your credit, and aren’t checking it, you may not know about these issues until you’ve been passed over for a position.

Where to Start

Even if you aren’t convinced you need strong credit, it’s smart to check your credit reports once a year to make sure the information is accurate and to look for warning signs of identity theft. You can get your free credit report once per year from all three major credit reporting agencies.

You can also get your credit score for free at Credit.com, along with an action plan for building strong credit. If you are convinced that good credit is important, you’ll want to make sure you are taking the right steps to get – and keep – a high credit score.