Why Your Credit Score Matters


Why Your Credit Score Matters

Not only does it affect your mortgage rate but also less-obvious areas.

I know that my credit score affects my mortgage rate. But do I need to worry about my score when I'm not about to buy a house?

You sure do. Your credit score, the numerical summary of how much you owe and how promptly you pay your bills, makes a big difference in your mortgage rate. But it also affects other less-obvious areas of your personal finances.

A good score can save you thousands of dollars on your car loan and credit card interest payments. But a low score can make it tough to get a loan, buy a cell phone, rent an apartment or get a job. It may reduce the size of the mortgage you qualify for, or require that you make a bigger security deposit when you open an account with a phone service or electric utility. And it can make a surprisingly big difference in your auto insurance rate because insurers discovered that people with low credit scores are much more likely to have claims than those with high scores.

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For more information on improving your credit score, see Demystifying Your Credit Score.

Got a question? Ask Kim at askkim@kiplinger.com.