Credit reports and scores may be in the running for the world’s driest topics. But when you understand how your credit affects your life, it gets a lot more interesting. Your credit can play a role in everything from your finances to your romances.
Here are a few reasons to get pumped about building your credit score.
1. You need it for more than borrowing
Credit is almost always necessary to get a mortgage, open a credit card and take out loans. But your credit could also play a role in life events that don’t involve borrowing money, including renting an apartment and landing a job.
RENTING AN APARTMENT
Almost half of landlords (43%) run a credit check on potential renters, according to a 2013 survey by TransUnion, one of the three major credit bureaus. They may be looking to see if your credit score meets a certain standard, or they may peruse your credit history to make sure you don’t chronically miss payments.
It’s possible to rent a place if you have bad credit or no credit. But particularly in competitive rental markets, such as New York City and San Francisco, you don’t want your credit holding you back from the charming studio apartment of your dreams. Just watch out for rental credit check scams on Craigslist.
Depending on where you live and work, potential employers could check your credit. They won’t see your score, but they’ll see your credit report, which details your payment history for loans and credit cards. Among other reasons, potential employers run credit checks to prevent theft and embezzlement and reduce their legal liability for negligent hiring, according to a 2012 survey by the Society for Human Resource Management.
Eleven states — including California, Illinois and Washington — have passed laws that limit potential employers’ ability to check your credit, according to the National Conference of State Legislatures. Cities including Chicago and New York City have also done so. The laws vary by location but are generally designed to protect people’s privacy and prevent discrimination.
2. You could save money on your student loans
Finding $10 in your coat pocket is a small joy that can make your day. Now imagine that feeling on a bigger scale: What if you found a few hundred, or even a few thousand, bucks?
You could save a good chunk of money with student loan refinancing. When you refinance, you pay off your existing student loans with a new private loan. You’ll save money if the new loan has a lower interest rate.
Say you have a $30,000 outstanding balance on a $35,000 loan and your interest rate is 7%. Lowering your rate to 5% with a 10-year refinance loan would save you almost $1,170 total, or about $88 a month, according to NerdWallet’s student loan refinance calculator. If you choose a shorter loan term — say, eight years — you’d save almost $2,900 total and pocket about $27 per month.
Here’s where credit comes in: Lenders are looking for a score at least in the mid-600s, but you’re more likely to get a low rate with a score in the 700s. (Credit scores generally range from 350 to 800.) Keep in mind that when you refinance federal loans, you give up federal loan benefits like access to income-driven repayment plans and forgiveness programs.
3. Your credit can affect your love life
As much as we might like to think otherwise, money and love are connected. Forty-eight percent of Americans and 63% of college graduates say they wouldn’t date someone with bad credit, a 2016 NerdWallet and Harris Poll survey found.
And it’s not just about whom you match with on dating apps. Couples with good credit scores are more likely to maintain lasting, committed relationships, according to 2015 research by the Federal Reserve Board of Governors. When partners have vastly different scores, they “may face challenges in jointly managing household finances,” which could play a role in the couple’s separation, the report says.
Don’t worry: You’re not destined to break up with your significant other just because you have different credit scores. With effective communication — because that’s what it always comes down to, right? — you can meld your money habits and even combine finances successfully.
Still think credit is boring?
That’s OK. You don’t necessarily have to devote tons of effort to getting your credit in shape. Simply checking your score regularly can have a positive effect on your credit behavior, a 2016 Discover Financial Services survey found. That’s likely because checking your score reminds you to pay your bills on time, pay down debt and keep your credit card balances low.