Not Planning to Borrow Money? Here’s Why Your Credit Score Still Matters

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Your credit score does more than just give you borrowing options. Read on to see why it’s important to keep yours in good shape. 

Your credit score says a lot about you as a borrower. It speaks to how timely you are with bills and how risky it is to lend you money.

If your credit score is in great shape, you’re more likely to get approved for a loan or credit card when you apply for one. And you’re more likely to snag a more competitive interest rate on the sum you’re borrowing, too.

But what if you have no plans to borrow money anytime soon? You might think you can just ignore your credit score. But actually, having great credit might come in handy even if borrowing isn’t in your future.

When you need to rent a home

Some financial experts (such as Dave Ramsey) will tell you that “you don’t need a credit score to get through life.” But the reality is that having a credit score — and a good one at that — is very helpful not just in the context of borrowing, but in the context of being able to put a roof over your head.

It’s common for landlords to run credit checks on tenants before agreeing to give them a lease for a home. Even though landlords aren’t lending out money, they’re handing over access to a home whose purpose, for them, is to generate income. So if your credit score isn’t in great shape, you may find that it’s tough to secure a rental.

Now, this isn’t to say you can’t work around a poor credit score in that situation. Your landlord might overlook a less-than-stellar credit score if you’re able to put down your last few months of rent as an added deposit.

But let’s say you’re trying to rent a home that costs $1,000 a month. It’s common for landlords to ask for $3,000 in that scenario — your first and last month of rent plus a security deposit equal to one month of rent.

With poor credit, you might need to hand over $4,000 or $5,000 to get that rental. Seeing as how 63% of Americans don’t have enough money in the bank to cover an unexpected $500 expense, according to a recent SecureSave survey, chances are, you don’t have that kind of money just lying around.

How to boost your credit score

You might need a strong credit score even if borrowing money isn’t in your future. And there are different steps you can take to boost yours.

First, pay all bills on time, since your payment history carries more weight (35%) than any other factor when calculating your credit score. Next, if possible, pay down some existing credit debt. That will lower your credit utilization ratio, another big factor that goes into your score.

Additionally, check your credit report for mistakes. It’s possible that yours might list you as being delinquent on a debt you settled on time. Credit bureaus are required to investigate disputes you bring to their attention.

Having a great credit score could make it possible to borrow money when you need to. But even if that’s not your plan, it still pays to do what you can to get your credit score into good shape.

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