Why a Good Credit Score Matters When You’re Not Borrowing

November 20, 2013

credit scoreWhy does a good credit score matter if you’re not planning to borrow any money? Many of us think that, as long as we already have a house and we pay for our cars in cash, a good credit score doesn’t matter that much.

Unfortunately, that’s just not the way the system works anymore. Your credit report is a convenient compilation of your financial habits and history, and it is easy to use the information in your credit report – or even to use your credit score – as an indication of what sort of risk you might pose in a number of financial situations.

Anymore, an increasing number of people are making judgments about you based on the information found in your credit report. You may rankle at the injustice, but it’s still there. Here are some of the ways that having a bad credit score can hurt you – even if you don’t want to borrow anything:

Opening a Bank Account

Believe it or not, there are actually some financial institutions that will run a credit check on you before allowing you to open a deposit account. Before you can open a savings account or a checking account, you might have to submit to a credit check.

Banks want to know, especially in the case of savings accounts, that you are likely to park a big chunk of money there – and leave it for a while. Plus, even though overdraft fees are a big moneymaker for banks, they don’t want someone who habitually goes in the red, and your credit report could provide a clue.

Insurance Premiums

Many insurance companies check your credit score when deciding on your insurance premiums. My insurance company regularly sends me a letter telling me that my credit score has resulted in a discount on my car insurance premium.

Over time, a good credit score can mean hundreds of dollars saved in car insurance premiums. If you don’t pay attention to having good credit, then there is a good chance that it will cost you.


What landlord wants to have to worry about whether or not you are going to make your monthly payments on time? As a result, some landlords will check your credit before approving your application.

In some cases, you might have to live in a less desirable rental if you don’t have good credit. (Of course, if you already have a home, this doesn’t matter as much.)

Certain Jobs

My brother in law was subjected to a credit check when he applied to be a security guard. He was rejected because some companies have concerns that someone with poor credit might be vulnerable to bribes.

Certain employers might want to take a look at your credit report before hiring you. If it looks as though your habits might not have been the most responsible, you might be passed over.

Building Your Credit

It’s frustrating for people who are trying to be financially responsible and avoid debt of any kind to find out they don’t have a good credit score since they have no credit history. The good news is you don’t have to go into major debt to build your credit score.

One option is to start using a credit card, and pay off your balance monthly. If you only charge what you have money to pay for it can help you improve your credit score while at the same time keeping you debt free.

Another option is to use secured loans to build up your score. Banks may not be willing to give you a regular loan if you don’t have a credit history. What you can do is deposit $1,000 into a 12-month CD, then use the CD as collateral for a secured loan.

What are some other possible reasons why a good credit score matters when you’re not borrowing? Leave a comment!

This article was originally published October 28, 2011.


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Miranda writes about personal finance almost every day. An experienced freelance writer, she's covered your money online and in print from every angle and is always looking for new ones.

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10 Responses to Why a Good Credit Score Matters When You’re Not Borrowing

  • Jolita

    If you are applying for a job or renting a house, your credit score is checked. Even before opening an account, credit check is required. So your score should be high for a good financial condition.

  • Barb Friedberg

    Very nicely stated. There is no benefit to forgeting about your credit score. You never know when you will need it 🙂

  • Sun

    You are using the terms “credit score” and “credit report” interchangeably. An employer can not see your credit score, but they can do a credit check to receive a credit report. I would say for rentals and certain jobs it may be a factor. The rest of your line items, I think it may be overblown, or very rare. I personally have never had a credit check to open bank accounts… and I do mean never. I also tend to think auto insurance premiums have more to do with what zip code you live in and what your commute miles are.

    • Miranda

      Actually, I mention in the job section that a credit report is checked — not a score. I did use the term “credit check”, but that can apply to a report or a score. And my last bank account required a credit check. Even my credit union was interested in my credit before I could open a share account. So I think it depends. And, my insurance company has been very clear that I am receiving a “good credit” discount. It’s fairly hefty, resulting in significant savings in the last few years. The point of the article was that credit does matter, and that paying attention to it can help you out, even if you aren’t planning to borrow immediately.

      • Dayna

        I also receive a significant discount on my auto and home insurance because of my credit report. Several years ago we had an error on our report and our insurance rates were increased while we got that straightened out. Even then it took a while for the full discount to be reinstated.

  • Debt Free Divas

    So true. Don’t forget utilities & cell phones!


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