If you don’t borrow money, it’s not important at all. So skipping over common things that involve borrowing money – like taking on debt – let’s talk about the less common reasons we’re told we need a credit score.
Car & House Insurance Rates
I can’t speak for the difference between a rate with a credit score and a rate without one, but when it comes to this, you don’t need a credit score to get car or house or renter’s insurance. Your premium is made up of a lot of factors, your personal claim history being the biggest factor. After this they take into account how often you’ll be paying, monthly or biannually or annually, how high your deductibles are, your age, whether you went to college or not, your grades in college (seriously), martial status, whether you have pets (dogs, especially), how much coverage you want, how close you are to a fire station, smoke alarm count, whether you have sprinklers or not, and somewhere on the list, your credit history. And this is not an exhaustive list, unfortunately.
It’s a factor in your insurance because people who poorly handle their credit often make more claims. However, if you’re a good driver with a high deductible and you pay annually or biannually, you’re not going to get dinged too much for having low credit or even no credit. I can’t speak to exactly how much higher it is as I don’t know, but it doesn’t appear to be too much of a difference, less than $100 a year. That’s less than the price of Netflix or Amazon Prime. It’s not fair, but if you’re debt-free you can afford it. Instead of telling people to work on their credit for their insurance rate, they (whoever they are) need to tell people to carry higher deductibles, pay annually or biannually, and not make claims on little stuff, as these are the things that are going to raise or drop your premium down the most.
Getting a Job
If you don’t have a credit score, you really shouldn’t be dinged for it. If they ask, a simple, “I don’t borrow money,” said in a non-snotty way will suffice. Keep in mind, most companies don’t ask for your credit report. And they’re getting your credit report, not your score. And they need to get your permission to do so, and you can always refuse. It’s mostly corporate jobs that do this, and most people don’t have a corporate job. Everyone hears a horror story about the single mom who gets turned down for a job after a bad divorce ruined her credit. This is not the norm by any means. I applied for a lot of jobs when I first got out of college. Not a single company asked about my credit. Now, I didn’t apply for a job at the bank or a large corporation or a job in the financial sector, but I also don’t know if they even ask to pull your credit if you apply for a low level job at the bank.
Opening a New Bank Account
You don’t need some kind of credit history to open a bank account. They ask for your social to verify your identity. And part of this identity does include if you have any outstanding unpaid fees owed to another bank, and that will cause you to get turned down. This is not part of your credit history. If they want access to your credit history, they have to ask your permission, and that’s only to push some kind of credit card or loan on you. I should know, I’ve banked with more people in the last year alone than most people bank with in their life, and I haven’t run into any problems. Not even bank hopping has made me look bad to banks.
Getting an Apartment
This is actually the easiest thing to overcome as you can often speak with management directly and bargain your way in, if you really want to live there. You can do this by offering to pay a higher deposit or offering three months of rent ahead of time. Again, not all apartments ask for this, at least not where I live, but if you don’t have a credit history and they care, this can be easily explained. If you have a low score, this can also be explained, and again, you can usually talk them into letting you in by agreeing to pay more up front, which demonstrates some financial stability and responsibility despite a lower score.
Renting a Car
Full disclosure: I’ve only rented a car once, and I did it with a credit card, and I paid in advance. I feel like I’ve covered this already, but to touch on it briefly again, you can avoid the majority of issues just by planning ahead. Booking and paying in advance, calling ahead to make sure they don’t have a problem with debit cards and what kind of stipulations they may impose on you for using one if they do. It’s kind of stupid, but people in general are kind of stupid. A little planning will go a long, long way here.
People aren’t stupid if they care about their credit score, it’s just not as important as we’ve been led to believe – led to believe so by banks and financial corporations that profit off of debt and debt products. You really can get by without one, but if you’re going to have one, try not to have a terrible one, yes? Having a poor credit score is worse than not having one at all.