Your credit score — the three-digit number between 300 and 850 that determines your creditworthiness — is important for acquiring credit and proving financial responsibility to non-lenders. Here are four occasions when you should know your credit score.
#1. You’re moving.
Whether you’re buying a house or moving to a new apartment, good credit will make it easier and cheaper for you. An excellent credit score will get you the best mortgage terms possible. While it may not seem important, a 1% difference in interest rate can be a huge chunk of money saved.
If you’re renting, a good credit score will help you get approved for a new place. Also, people with good credit will often have to pay a lower security deposit than those with poor credit, as rental managers aren’t as worried about not getting paid in a timely manner with a creditworthy individual.
By knowing your credit score before you make your move, you’ll be better equipped to increase it to get approved and get the best rates, or prepare yourself for what your rates or deposit will likely be.
#2. You’re applying for new credit.
An excellent credit score will get you approved for the best terms on other credit accounts, including personal and car loans. Having poor credit can cost you hundreds, or even thousands, in interest accrued. Check your credit score before you apply for credit and postpone your application to work on improving your credit if necessary and possible.
#3. You’re getting married.
According to a recent study by Experian, 96% of adults put a high priority on financial compatibility with their mates. This trailed behind only family and life goals and ranked higher than sexual, religious and political compatibility. On top of this, half of all respondents said that their potential spouse’s credit score was important to them.
Before you say “I do,” you and your spouse should discuss your respective finances, including credit scores, debt loads, savings balances and financial priorities. Pull your score and ask your future spouse to do the same so there are no surprises when the honeymoon is over.
#4. You’re getting divorced.
If you’re splitting from your spouse, he or she won’t get your credit score in the settlement. However, divorce can hurt your credit indirectly. If any credit accounts are in your name, it doesn’t matter who the judge orders to pay the balances, your credit will be damaged if they go unpaid. Also, you should split your accounts right away. A vindictive ex with access to your accounts can easily run up bills you can’t afford, hurting your credit. Know your credit score so you can monitor it for changes following your divorce due to a non-paying former spouse.
Another credit issue with divorce: Many people are under the impression that if their spouse has good credit, they don’t need to build theirs. This is totally untrue. In the case of death or divorce, you need a good credit score to help you obtain credit or prove your financial responsibility. Know your score and work to improve it if you’ve been relying on your spouse’s good credit.
How do I check my credit score?
While it may be tempting to use a free score service, you should opt for a FICO score — the most widely used score in the United States. Your credit card issuer may offer this for free. If not, you’ll have to purchase your score. You can buy your scores directly from each of the three major credit reporting agencies:
If your score isn’t up to par, use these five steps to build your credit.
Bottom line: Check your credit score if you’re moving, applying for new credit, getting married or getting divorced. Unless your credit card issuer offers a free score, you’ll have to pay for this privilege. You can purchase your credit scores directly from the reporting agencies.
Man moving couch image via Shutterstock
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