Why Lenders, Creditors, And Other People/ Companies Check Credit Scores?

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Credit scores help your lenders get to know more about the risk of working with you. But not only lenders will be interested to check your credit history. Utility and cell phone companies will also want to check your current score. Based on that, they will propose the terms of your contract. Having a good credit score means that you will get better interest rates, decreased deposits, or no deposit at all. Don’t be surprised if your landlord asks for your current credit score. In this article, you will find out why each lender, creditor, or company will check credit scores.

Banks

Your bank will check your credit score when you apply for an account. They want to make sure that you overdraw and abandon accounts. They will check credit scores, even if you don’t include a credit card in your application.

Creditors

Potential creditors will check credit scores to determine if you will be able to pay on time. This is the most important factor that will determine if they will approve a credit or not. If you apply for a loan or credit card, the creditors will create therms based on your score. This means that if you have good credit, then the terms will be made more convenient for you.
The credit score range is from 300 to 850 according to the FICO model. A score of 700 means that you are trustworthy for the potential creditor.

Landlords

You might be surprised to find out that companies can require access to your credit scores. And don’t forget that landlords fall in this category too. They can legally check your current score, but they will need written permission from you. A landlord would want to check your current status and have a better picture of your financial stability. This is a normal part of the screening process so that they will make sure that you pay your monthly rent. Also, this type of information will help them decide on the size of the deposit that they will ask.

Cell phone companies

Be aware that cell phone companies will check your score before they give you any new contract to be signed. It is pretty clear that they want to make sure that you are able to pay your monthly bill. This is especially important if you are a new customer. Some of the payment plans that they offer are similar to bank loans with zero interest, so this is what all of the fuss is about. But, be aware that these are considered as hard inquiries. This means that they might be able to harm your current credit score.

Utility companies

Companies are paying attention to credit scores more than they have ever done. You will be asked for a credit history report from the utility companies as well. Based on this, they will determine if a security deposit will be needed. On the other hand, this will make them decide about how much to ask for a deposit. Or, not ask for one if dealing with a reliable credit score.