Who Uses Your Credit Score to Make Decisions About You—and Why

Big brother is watching ... your credit score. While it's the main indicator lenders use to analyze your ability to handle debt responsibly, you might be surprised by who else is monitoring your score—and for what reason.

Some view your score as a gauge of your character and what kind of person you are. Others just want to know you’ll pay them back. That's why it's vital to work toward a good score, so you have it when you need it.

Lenders and Credit Card Companies

Who is looking and your credit score? What lenders want to know before they grant you a loan.

If you apply for new credit, the lender will undoubtedly review your credit score because it shows your history and habits with borrowed money. This is true whether you need a:

  • Credit card
  • Store card
  • Mortgage
  • Loan to buy a car, pay for school, or open a business

The higher your credit score, the easier it will be for you to obtain credit and qualify for favorable interest rates. The opposite is true if you have a bad credit score.

Want proof? People with bad credit are consistently saddled with higher interest rates on credit cards—nearly 60 percent higher—compared to cardholders at the national average. This is because lenders think they’re taking a bigger risk on the likelihood that you will pay them back and would like to earn more for taking that risk.

Final note: Curious to see what kind of interest rates you might qualify for based on your credit score? Check out this calculator at www.myfico.com.

Service Providers

Which service providers check your credit score.


You may say that having a low credit score has nothing to do with your driving abilities, but insurers don't see it that way. Insurance industry research has shown that those who manage money responsibly are more responsible with other parts of their lives, including driving and caring for a home.

If you need auto, renters’, or homeowners’ insurance, insurers will look at your credit score. And a low score may mean you'll pay higher premiums—up to $22,815 over your lifetime (with that you could buy a new car)!

Utility Companies

Part of getting your own place is paying for utilities like energy and electricity—and utility companies want to make sure you’ll come through.

“They [utility companies] often check credit reports, and some won't extend credit without a large deposit if you have a negative history,” says Gerri Detweiler, a credit expert with Credit.com.


When you get a cellphone, the provider will check your credit report to see whether you've been paying your bills on time. If you have a spotty credit history, it may require you to put down a cash deposit—maybe as high as $500—before offering you an account. This allows the provider to cover itself should you get behind, but it leaves you shelling out more to use the phone upfront.

Final note: If you want to protect your property, keep the lights and heat on, and score a smartphone without a big financial hit, work toward a good score.


Why do landlords check your credit score?

To many landlords, a lower credit score means you're more likely to be late on rent or miss it altogether. That’s why Jerry Lynch checks the credit scores of his potential renters.

"If people have not paid people that they owed money to in the past, there is a very reasonable chance they will not pay me," says Lynch, who owns several rental properties in New Jersey. "If they have paid everyone in the past, it is more likely that they will pay me."

Lynch remembers several times when he encountered a possible renter with a bad score. Some were college students or young adults who had never used credit. For these renters, Lynch required them to get someone with good credit to co-sign the lease, figuring he could tap the co-signer if he ever had a problem collecting rent or paying for damages.

Final note: If you have poor credit, be aware that you might have to find someone to sign off on your lease.


Why are potential employers checking your credit score?

Nearly half (47 percent) of employers include credit checks as a part of background checks on job candidates, according to a 2012 survey by the Society for Human Resource Management (SHRM).

Although employment studies haven’t proven conclusively that your credit score has a connection to your job performance, many employers still are hesitant to hire you if you have poor credit. Some believe you may be more tempted to steal; others think you’ll have a hard time managing the company’s money if you’re struggling to manage your own.

It gets even more serious for government employers like the armed forces. Military employers may presume that if you have personal money problems, you might be more prone to blackmail or taking bribes, or you’ll let the stress of dealing with creditors and debt affect your job performance.

"Members of the military can even lose security clearance or be deemed ineligible for promotions if they have credit issues," says Will VanderToolen, director of counseling services at AAA Fair Credit Foundation in Salt Lake City.

Final note: Thanks to the Fair Credit Reporting Act, an employer must ask your permission to pull your credit before doing so and notify you if you were not hired because of something it saw.

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]