5 Companies that can check your credit history —even if you didn’t apply for a loan!

5 Companies that can check your credit history —even if you didn’t apply for a loan!

We tend to think that the only ones that are going to check our credit report are lenders who we want to borrow money from. But that’s not true! Plus, find out everything about the classic misconceptions about credit score.

It makes sense for lenders to check your credit report. After all, they are borrowing money so the least you’d expect is for them to check what kind of financial behavior the borrower has. But the federal law allows other types of companies to peek at your credit history, here are 5 of them:

1. Insurance companies

Credit reporting companies can release your information to insurance companies, because they use this information to set your premium charges. Federal law allows insurance companies to prescreen your report in order to offer you different quotes, but it also allows you to opt out of prescreening.

2. Employers

A potential employer can request a copy of your credit report as part of a background check. However, the employer must have written authorization before pulling your credit report. Of course, you can refuse but that might cause the employer to reject your application.

3. Public utilities

When you sign up for water, electricity or gas, you might be required to submit your credit report. Why? Well, because of the way those services work. Public utilities are paid in arrears —which means that you pay for usage, so naturally, first you use the service and then you pay for it. If you put it this way, it makes sense for companies to make sure you can actually pay bills. 

4. Landlords

Federal law also allows landlords to request a copy of your credit report —and this is actually a very common practice. While rent is not usually reported to credit bureaus, your credit report can give your potential landlord the idea of your overall likelihood to pay and your financial responsibility.

5. Nursing homes and assisted living facilities

If you apply to live in one of these places, you can expect them to request your credit history, as they treat every application like applying for an apartment, so with your credit history, they can also evaluate if you are a good candidate or not.

BONUS TRACK: CLASSIC MISCONCEPTIONS ABOUT CREDIT SCORE

Do you think you understand everything you need to know about credit scores? Many consumers aren't sure they know exactly which are the factors that can help you improve or completely damage their credit score.

It's this lack of knowledge that leads to having problems with your ratings. So, if you are struggling with your balances and credit score, make sure you check the following misconceptions about this issue.  

1. Only one credit score

This is one of the most common misconceptions of credit score. Although FICO is the most popular one, there actually are several models to calculate credit ratings.

The range of credit score goes from 300 to 850. The higher the score, the better. It means that you are a perfect borrower and you will have better access to financial benefits.

2. You can improve your score by closing your credit accounts

Many people assure you that you can improve your score by closing your credit accounts. However, it's exactly the other way around! This is because it will lower the amount of credit available to you regarding the balances that you owe.

Even if you aren't using a credit card anymore, the available credit will remain high on your report, that's why experts always recommend keeping your unused cards open.

If you keep a good payment record and opened accounts for quite a period of time, you will probably help to keep your credit score high.

3. Increasing your credit score can take a long time

If you missed plenty of payments and your credit score plunged, you don't need to panic! Avoid closing accounts with negative marks, that won't help. Creditors will still access to that information and will define how you handle debt.

There are more efficient ways to improve your credit. Remember that scores usually update every 30 days, so if you make payments on time and avoid using new credit, the number will increase by 20 points in three months.

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