Episode•April 5, 2023•6 min

How Much Does Your Credit Score Matter? | Ep. 217

Ever wondered, "Hey, does my credit score actually matter? Do I really need to care about it? Or is it just another number the world has cooked up?" Well, you're in luck! In this fun and informative episode, we explore the significance of your credit score and the various reasons behind its importance. From lending and financing to landing that dream job, we delve into how credit scores can impact different aspects of your life. Spoiler alert: It really does depend... But don't worry, we'll explain why! Every Tuesday, Tiffany answers one of your submitted questions. To submit a question for an upcoming episode, visit here: https://www.moneytalkwitht.com/asktiffany Key Takeaways Credit score matters if one is looking for lending, financing or even a job; as employers may pull credit reports/scores. Insurance companies also use credit scores to determine rates. If one has all the stuff they need and isn't looking for financing or debt, then the credit score isn't too important. However, it's wise to maintain one's credit score anyway, as one never knows what they might need or want in the future. Connect with Tiffany Website - https://www.moneytalkwitht.com Facebook - Money Talk With Tiff Twitter - @moneytalkwitht Instagram - @moneytalkwitht LinkedIn - https://www.linkedin.com/in/tiffanygrant1/ YouTube - Money Talk With Tiff Pinterest - @moneytalkwitht TikTok - @moneytalkwitht This podcast uses the following third-party services for analysis: Podcorn - https://podcorn.com/privacy OP3 - https://op3.dev/privacy

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Key Takeaways

1
Credit scores matter primarily when seeking financing, jobs, or insurance
Lenders use credit scores for car loans, mortgages, and other financing decisions
Employers, especially in finance, may pull credit reports to assess trustworthiness and debt levels
Insurance companies factor credit scores into determining premium rates
2
Credit score importance depends on your current financial situation
If you already own a home, car, and aren't seeking new financing, credit score becomes less critical
Dave Ramsey's advice to eliminate credit needs works only if you can cashflow everything without debt
Maintaining good credit keeps future options open even if not currently needed
3
Credit scores impact more areas of life than most people realize
Insurance rates can vary significantly based on credit score differences
Job applications in finance or money-handling roles often include credit checks
Hard money lenders that don't check credit are rare and difficult to find
4
It's wise to maintain credit health regardless of current needs
Unexpected future needs or wants may require financing
Keeping options open prevents limiting future opportunities
Credit scores reflect past financial responsibility that employers and lenders value

Intro

In this episode, Tiffany addresses the common question of whether credit scores truly matter or if they're just another arbitrary number, exploring when they impact your life and when they don't.
Tiffany is a financial coach and host of the Money Talk with Tiff podcast, answering listener-submitted money questions every Tuesday.

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– Does Your Credit Score Actually Matter?

Tiffany opens by acknowledging the listener's question about whether credit scores are truly important or just overhyped, noting that the answer depends on individual circumstances.

It depends. OK. And I know you all are probably like Tiffany, you say it depends a lot, but it really does.
– Tiffany

– When Credit Scores Matter: Lending and Jobs

Tiffany explains that credit scores become important when seeking lending or financing, and surprisingly, when applying for jobs. Employers in finance industries often pull credit reports to assess trustworthiness and debt levels, as high debt might create incentive for theft.

Jobs will pull your credit report and pull your credit score to see if they should employ you as part of your evaluation package.
– Tiffany

– Insurance Rates and Credit Scores

Tiffany shares a surprising discovery that insurance companies use credit scores to determine rates. This explains why people with similar profiles can receive vastly different insurance quotes.

Your insurance company might use your credit score to figure out what rates they need to charge you.
– Tiffany

– When Credit Scores Don't Matter

Tiffany outlines scenarios where credit scores become less relevant: when you already own your home and car outright, aren't seeking financing, and can cashflow all needs without debt. In these cases, the primary purpose of credit scores (securing financing) becomes moot.

If you already have a house, you already have a car, you're not looking for financing for anything and you don't think you will be using it in the future, then a credit score is kind of like a moot point.
– Tiffany

– Why Maintain Credit Anyway?

Even if credit isn't currently needed, Tiffany recommends maintaining good credit as a safety net for unknown future needs or wants. She argues against completely eliminating credit access, noting it limits options unnecessarily.

I would argue to say it's good to just make sure you keep it up anyway, even if you are in that situation, just because you never know. You never know what you might need.
– Tiffany

Resources

Topics

credit scorepersonal financelendinginsurance ratesjob applicationsfinancial independenceDave Ramseycredit managementfinancing decisionsfinancial planning