Ask the Experts: Credit score matters even for non-borrowers ...

If you're not applying for a loan or a credit card, does your credit history really matter?

This week, certified financial planner Kimberly Foss, owner of Empyrion Wealth Management in Roseville, Calif., has the answer.

QUESTION: Should I care about my credit rating? I don't owe anything and have no plans to move or buy a house. I have a pension that takes care of all my needs and $300,000 in savings. I use a Costco American Express credit card and pay it off monthly. Does my credit rating matter?

ANSWER: That is a great question. While there are many areas where your credit rating is not a factor (as you mentioned above), there are other areas where credit ratings may be a factor. That's why it is important to not only maintain a solid credit score, but to understand your score and have confirmation that your credit rating is good.

There is a difference between your credit score and your credit report. Your credit score is a three-digit number, typically from 300 (low) to 850 (high). It is based on your credit reports, which are a history of your credit card use, loan payments and other bill-paying habits.

By federal law, you are entitled to a free credit report once a year from each of the three credit reporting bureaus: Equifax, Experian and TransUnion. To get a copy, go to AnnualCreditReport.com or call 877-322-8228.

There are times when a credit score can come into play. While these might not affect your specific situation, it is important for everyone to understand how our credit scores can impact our lives. Here are some examples:

1. Getting a job: Generally, under federal law, an employer must obtain your permission to pull your credit report. The risk is that if you decline, it can create questions in the employer's eye.

Some states have adopted stricter controls over when employers can look at your credit history. California is one of eight states where employers cannot pull your credit report, unless the job involves working in finance, law enforcement or certain other managerial positions.

2. Student loans: Your credit score is a factor when qualifying for a student loan from a private institution or bank. Lenders are required to do a credit check to see if you have bad credit history. It helps them determine your overall credit worthiness and reduce their risk of a loan default. The better your credit score and history, the better chance you have to get the loan, as well as repay it.

3. Renting an apartment: Fair or not, your credit score affects your ability to rent a home or apartment. Landlords may look at your credit score, past rental history payments and current income (among other factors) when determining if you are a viable candidate to rent or lease. Not all landlords check credit histories, but it's wise to be prepared just in case.

Otherwise, even if you're not applying for a job or renting an apartment, it can be helpful to check your credit history once a year to be sure there are no errors that could cause problems. You can guard against identity theft by checking to see if there was fraudulent activity or accounts wrongly opened in your name.

A credit score does matter. With each passing year, there are some things we would like to go down (like our weight) and some things we would like to go up (like our credit score).

Source: http://www.myrtlebeachonline.com/2013/05/13/3484275/ask-the-experts-credit-score-matters.html

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