Your credit score isn’t an arbitrary three-digit number. It’s based on a summary of your history with credit — and it sends a strong signal about how you’re likely to handle new credit.
Your credit history can directly impact what you buy, where you live and even where you work. It can make important transitions, such as getting a new apartment or buying a home, smooth or challenging.
Here are six ways your credit standing can affect your life.
1. Buying a home
Before you start scouring open houses, know that a credit score of 740 or higher (the scale goes to 850) helps you qualify for the best mortgage rates available, particularly on conventional loans.
If your score is lower, though, you still have options. Federal Housing Administration loans, which are popular among first-time home buyers, let you put as little as 3.5% down if your FICO score is 580 or better. If your score is below that, you may need a 10% down payment to qualify for a loan.
2. Upgrading your credit card
Interested in that new travel credit card your friends have been raving about? In order to qualify for the top credit cards — with generous sign-up bonuses or amazing travel rewards — you generally need to have a good or excellent credit score.
Those with bad credit still have some solid credit card choices. A secured card can help you build your credit if you focus on the two biggest credit factors: paying on time and using less than 30% of your limit.
3. Buying and insuring a car
Car loan rates are similar to home mortgage rates: The better your credit score, the better your options tend to be. If you have a low credit score, you will likely have to pay a higher interest rate — or worse, your car loan application could be rejected.
Credit can make a difference in your insurance costs, too. Most states let insurers weigh credit scores when setting rates; the exceptions are California, Hawaii and Massachusetts. In other states, drivers with poor credit pay an average of $690 more per year for auto coverage than those with good credit, according to a 2017 NerdWallet study.
4. Moving into a new apartment
Did you find an amazing condo on Craigslist? The landlord may ask you to provide a credit report or could run a credit check for you online. Excellent credit could help differentiate you from the crowd of applications, while poor credit could rule you out.
Landlords and property managers are looking for responsible tenants who will pay their rent on time, so it makes sense that they would be wary of those whose credit histories indicate lots of missed payments.
5. Starting a new business
Starting a business is already challenging, but bad credit could limit your funding and make it that much harder. If your score is between 300 and 629, banks will most likely reject your small-business loan application.
6. Getting hired
Some employers check the credit of potential hires, especially for jobs involving access to money, sensitive customer data or company information. Applying for a government role, such as the Transportation Security Administration, could require a credit check.
However, employers are required by law to get your permission before running a credit check. If that happens, it’s wise to address any potential issues with your prospective employer before the credit check. That gives you a chance to explain credit missteps.
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The article 6 Big Ways Your Credit Can Affect Your Life originally appeared on NerdWallet.