By Mike Goldstein, Content Writer at Credit Karma
Some things in life just follow you around.
Your kids might whine and moan about their algebra homework, but when they get older and try to alter the serving size of a cake recipe or find the best deal at a supermarket, those practice sets might come in handy. When renovating your home, it might be tempting to cut corners on a paint job or while levelling a picture frame, but then you'll spend the next five years staring at splotchy walls or crooked artwork.
When it comes to your financial health, your credit score is one of those things that'll just keep seeking you out. It's tempting to think that your credit score or credit health will only come into play when you're looking for a mortgage or a new credit card. The truth is that your credit information can be checked far more often than you might think.
1. Applying for a Job
When applying for a job, a prospective employer may request to see your credit reports. Employers can only access your credit information with your consent, and there have been an increasing number of regulations restricting the practice. Still, this situation has become relatively commonplace, so it's good to be aware of the possibility before you enter the application process. A 2012 study by the Society for Human Resource Management found that 47 percent of employers conducted some sort of credit background check on applicants.
While employers are only able to see your credit report and not your credit score specifically, it's still worthwhile to monitor your credit reports for negative information before embarking on the job hunt. Employers could see negative credit history as a sign of bad habits, negligence or misplaced priorities, so it's best to head off this issue before it becomes a problem for you.
2. Opening a Phone or Electricity Account
Utility accounts are a no-win proposition for your credit profile. This type of account isn't reported to credit bureaus as an open credit line, so paying on-time will not positively affect your credit, yet missed payments will often be reported anyhow.
If you're looking to open up new accounts for electricity, cable, internet or any other utility, your credit score and report may be checked as part of the evaluation process. Just as with employers, these companies will often ask your permission to do so, but they aren't required to, so stay aware. If your credit report features negative information, utility companies may in turn ask you to pay higher rates, put down an initial deposit or have someone else co-sign with you.
3. Dealing with a Government Agency
Yes, even good old Uncle Sam can take a look at your credit reports. The most common impetus is child support cases. In situations involving child support, the responsible agencies can look into your report to see if you have a history of missed payments on other types of accounts. By doing so, the agency will attempt to learn whether or not you can afford your child support payments and just how much you can afford. Beware that missed child support payments will reflect negatively on your credit reports as well.
Beyond child support, governmental bodies may also look into your credit if you're applying for government assistance or for certain licenses. Keep your reports clean to avoid unhappy surprises when submitting these types of applications.
4. Finding a Place to Rent
If you're hunting for a house or apartment, your credit health will factor into the landlord's decision. Most prospective landlords will ask you to consent to a full credit check, involving both your report and score, as part of their evaluation process. A low score or a report full of negative history could result in the landlord declining your application. Even if the landlord is more understanding, they still might require you to find a co-signer or offer a larger deposit in order to compensate for your less-than-attractive credit history.
So what can I do?
The most important thing to do is to remain vigilant about the health of your credit file. Free services like Credit Karma can help you track the details of your credit score and report in order to ensure that there's no incorrect information that may affect your approval odds.
You should also monitor your hard inquiries to guarantee that no institutions have been running your credit without your permission. While all of these groups may request to view your credit, only requests with your specific permission should register as hard inquiries that may affect your credit score. It's important to remain aware of the difference between hard inquiries and soft ones, which don't affect your credit score at all and are often used in situations like these, and to anticipate any new marks on your credit report.
Your credit health is one of those things that comes back around like a boomerang. Stay one step ahead just in case your score comes up when you're least expecting it.