Credit checks are not just reserved just for credit card applications – there are a whole host of circumstances where you might need to provide a credit score. This is only becoming more common as we rely on our good credit for more luxuries and conveniences. Whether your score is high or low, it is something that can almost always be improved. And most of the time, it is well worth it to make the effort.
If you haven’t checked your credit report lately, you might want to do so. It’s always good to stay up-to-date and monitor what’s changing with your personal financial profile. Not only can this help you detect and stop fraud early, but you’ll have a better idea of what to expect the next time you do apply for credit. In the meantime, here are 5 common situations that might require a credit check.
1. Applying for a Mortgage or Lease
Obtaining housing almost always requires a credit check, whether you are looking to rent or buy. Applying for a mortgage will always include this step as the lender begins an assessment of your payment history. If you’re a renter, chances are that your credit was run and accepted when you first applied. Landlords need to know that you pay your bills on time so that they won’t end up stuck without payment at some point down the line, and a credit check has proven to be the most reliable predictor of future financial behavior.
2. Renting or Buying a Car
Sometimes, but not always, a credit check will be required to make you eligible for car rental services. The rental establishments can do so quickly over the phone or in-person when you turn in your paperwork. When you buy a car, the dealer will certainly perform a credit check if you plan to finance the vehicle, unless you have already obtained financing from another source.
3. Obtaining A Cell Phone or Utility
Cell phone contracts nearly always need a check done on your credit, as do many utilities such as internet service, electricity, etc. If you’ve already established a solid payment history with the company under another account, sometimes the company will skip the check, but if you’re applying for a new phone or utility, chances are you will need to have a minimum credit score.
4. Background Check for Employment
Certain jobs, such as those where the employee is expected to handle financial information for the client or company, will require a passing score on a credit check. That generally will happen before you can even be considered for a position. Actuaries, bookkeepers, and even cashiers sometimes will be required to undergo a full background check that includes reviewing a credit report.
5. Buying Insurance
Insurance is another area where your credit history makes a big difference. Premiums must be paid on time, and an insurance provider will need to know that you have managed your finances responsibly in order to set you up with the policy you require. If you’re applying for auto insurance, a current motor vehicle driving record will probably also be required as part of your background check.
Knowing what your score is before you find yourself in any of these situations will make the application process far more predictable. You don’t want to be denied for a cell phone contract just because some long-forgotten debt is hanging around on your credit report.
Have you checked your credit score lately? Do you know what history a credit report will reflect when viewed by a potential lender? Stay informed and take control of your finances.