Some people mistakenly believe that access to their credit report is restricted to lenders and banks. But information on your past debt and payment history reaches farther and wider than that. Let’s say there was a recent college graduate named Nathan, who just accepted a new job with a great salary. He’s now planning to rent his first apartment and lease a new car. But in the background of all this upward momentum, his credit report is playing a vital role in ways he might not realize.
There are many different instances where your credit report might be accessed and not all relate to borrowing money. Your credit score can affect important parts of your life, such as your apartment or your job.
Yes, Nathan’s future employer, after receiving his consent, can request to get information on his credit report. Why? Often a credit report is part of an employment background check.
In Nathan’s case, the only negative mark on his credit report is a lack of credit history — he’s never had a credit card, auto loan or mortgage — but that didn’t concern his new employer.
Heads up: The good news is that an employer has to ask your permission to access your credit report.
Nathan’s potential landlord might look at his credit report to decide whether he would make a good tenant. The credit check might be done through the apartment’s broker, which is done with the tenant’s knowledge and consent — and often at the tenant’s expense. When applying for a new apartment, your credit report can be very influential. Given two potential tenants with similar incomes, a landlord may choose the applicant with the better credit report, regardless of who applied first.
Heads up: You can request a copy of your credit report from any consumer reporting agency - often for free. Having your report allows you to know what your landlord will see.
As Nathan is test-driving sedans, auto insurance companies may be obtaining information from his credit report and price the policies based on this information. A low credit score could lead to higher premiums, while a good credit score could lead to lower premiums.
Heads up: Not all states allow insurance companies to use credit reports to price coverage.
In Nathan’s story, we see three sources checking his credit report. In reality, even utility companies or government agencies can request access to your credit report.
The big takeaway: If you're not connecting the dots between a good credit report and some of life's biggest milestones, someone else will.