Like that relative that has a habit of showing up at your door unannounced, your credit score can be a sneaky and unpleasant surprise. Most people know that their credit report has a say in their approval for a car loan or mortgage, but it doesn't end there. Credit reports can impact everything from employment to car insurance rates. See all the ways a credit score can sneak up on you and learn how you can improve your score so it doesn't keep haunting you through your daily life.

1. Employment

Man on a job interview

With all the non-discrimination policies that employers need to abide by, most people aren't aware that a potential employer has a legal right to get a copy of an applicant's credit report. Even though the employer will need to get permission first, it may come as a surprise that the hiring decision can ultimately be impacted by the score. A low score is not automatically a deal breaker, but it can make the hiring manager take a closer look at the applicant and question if they are a good fit. A low credit score is a bigger concern in some industries like financial services (you should be able to practice what you preach).

2. Car Insurance

Car insurance poicy

You got approved for an auto loan and that's the extent of the role your credit score will play when it comes to your vehicle, right? Not quite. Your score will once again be scrutinized when you're shopping around for auto insurance. Car insurance companies check your credit score in order to determine your likelihood of filing a claim before presenting you with rates. It may not sound fair, but if your credit is low, they can hike up your premium, even if your driving record is as clean as a whistle.

According to WalletHub, drivers with no credit pay, on average, 67% more for car insurance than those with excellent credit. The discrepancy can be as drastic as a driver with no credit paying two times more than their good credit counterparts. 

3. Car Loan Interest Rates

Car loan application approved

Why did we include car loans as a sneaky way a credit score can affect you? Most car shoppers know that a good credit score will get them approved for auto finance at a fair rate. The surprising part is just how much a low credit score can impact the borrower's interest rates.

An auto finance report from WalletHub compared the total interest paid by borrowers with excellent credit to those with fair credit on a $20,000, five-year loan with a fixed interest rate. A borrower with a fair credit score of 620-659 paid, on average, $8,115 in interest over the course of 5 years while a borrower with excellent credit of 720 or above only paid $1,916 in the same timeframe. 

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4. Housing

apartment for rent

You’re probably aware that a credit score can affect your ability to get a mortgage on a house, but did you know it can also impact your ability to rent an apartment and set up your utilities? Auto and mortgage lenders loan you money to pay for your vehicle or house and a landlord is essentially loaning out their property. They want to make sure you can make your rent payments every month and your credit history is the best indicator.

When you fill out an application for an apartment lease, the landlord will likely check your credit history. If you get denied for an apartment, it could be that missed car payment from last year coming back to haunt you. Even if you do get approved for an apartment lease with bad credit, you may get hit with extra fees and deposits when you get your utilities set up. 

5. Relationships

Couple looking at their bills

Perhaps the most personal way that your credit score can haunt you is by taking on the role of a homewrecker. The Federal Reserve Board found that the bigger the discrepancy in the credit scores among partners, the more likely the relationship will end in the first 5 years. The reason for this cold hard truth is that credit history can predict future credit usage, spending, and the couple's financial well-being.

Of course, there is an exception to every study. If the party with the lower credit score had a rough time in the past due to medical bills or other unexpected expenses but is actively working to improve their spending habits to align with their partner's, there is less cause for concern.

How to Boost Your Credit Score

Improve your credit score
Get that bad credit monkey off your back with a concerted effort to raise your score.

If you're ready to escape all the ghosts that come with a bad credit score, you should put together a plan of action to raise your score and start acting on it as soon as possible. The easiest place to start is by checking your credit report for any errors. Maybe there's a late payment that was actually made on time or some fraudulent activity. If you find errors, dispute them with the credit bureaus immediately.

Another quick way to improve your score is by decreasing your credit utilization. By paying down your credit card balances and getting a credit limit increase, your utilization will go down while your credit score will go up. Additional actions to improve your credit will take some time but your consistency will be rewarded with a higher score. Make sure you use credit regularly, always pay your bills on time and do your best to pay more than the minimum.

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