Did you know that 26 million Americans are “credit invisible?” This means that one of every ten adults has no credit history. Nineteen million Americans are considered “unscorable” because their credit history is insufficient. And, finally, more than half of the people between 18 and 29 years of age don’t have a credit card.
But if you don’t plan on borrowing money, why do you need a credit score? Well, a credit score impacts more things than you know. Here are just a few ways you might be inconvenienced if you don’t have a credit score:
1. It’s harder to rent an apartment.
A lot of landlords require credit checks before approving a potential renter. A good credit score will help a landlord see if you’re more likely to pay your bills on time. It’s not impossible to rent an apartment with no credit; however, you don’t want to miss out on the perfect apartment because you failed your credit check. Also, if you’re married, make sure your credit cards are under both you and your spouse. Many people have lost a spouse and discovered they had no credit because the cards were all under their spouse’s name. You could have no credit without even knowing it!
2. Higher insurance costs.
Did you know that your car and homeowners insurance rates could be higher if you have a poor or no credit score? A good credit score shows your insurance provider that you’re responsible and reliable. Many car insurances rely more on your credit score than your driving record to decide your insurance rate.
3. Terrible loan rates.
If you don’t have a credit score, lenders don’t have a reliable way to know if you’ll be a risk or not. Therefore, they’re more likely to charge you a higher interest rate for a loan. Even having a poor credit score is better than no credit score because at least the lenders have some information to go on. If you don’t have a credit score, you’ll have a harder time getting a loan with a decent interest rate if you ever need one.
4. Travel inconveniences.
A few years ago, you couldn’t rent a car without a credit card. Recently, rental companies have started allowing you to rent a car with a debit card, with restrictions of course. Some companies require you to pay a deposit before you can rent a car with a debit card. Some companies even check your credit score before you can rent a car to ensure you can pay the damages if there’s a catastrophe.
Use your credit card wisely and pay your bills on time to start building your credit today. If you are wise with your finances, you can build a strong credit profile and start creating your financial freedom.
If you’d like more information about how you can improve your finances, check out FinStrong today.