Okay, using the word, “ruin,” in terms of what a bad credit score can do to your life may be a bit of an overstatement. 

It is probably more accurate to say that bad credit can produce a nasty hiccup, necessitate a detour or a create a pothole on the road of life.

The subject came up recently when I was talking with an older friend of mine, a homeowner with several investment properties, a vacation home and a number of classic cars that were all purchased with cash. She had a simple question – Why should I care whether I have good credit? I am definitely not trying to buy any more property.

Most people understand that there is a need for a good credit score if seeking to obtain financing for a home. This is a situation in which having bad credit could cost you thousands, or even tens of thousands, of dollars. Rest assured that lenders will thoroughly review your credit score and credit history during the mortgage application process. The worst-case scenario is your application for a loan could be denied if you have poor credit.

The other ways bad credit can seriously impede your quality of life and drastically reduce your ability to be financially solvent are not quite as obvious. 

The list below contains a number of items that can get pricey or unattainable if your credit is less than positive:

• Credit cards – Interest rates on credit cards can range between seven and 36 percent. A good credit score can land you anywhere from 10 to 19 percent. With a bad credit score, the baseline interest rate can start at 22 percent and go up from there. This can make a huge impact, especially if you carry a balance.
• Car insurance – It is a surprise for many people to learn that insurance carriers in 47 states review an applicant’s credit score before deciding on a rate. The result is that you could have higher-than-average rates for years to come. Certain carriers may not even approve you for insurance coverage at all if your credit score is extremely low.
• Searching for employment – Believe it or not, it is legal for a potential boss to analyze your credit report, as long as you approve it in writing. This type of information can be used for the basis of making decisions about hiring, and it’s permissible under the Fair Credit Reporting Act. After all, many types of employers - such as banks, jewelry stores, credit card companies, etc. - face a significant amount of risk from theft, so it is easy to see their logic in deeming a candidate unworthy because of items on a credit report. However, some states have laws that limit the use of credit information in the hiring process.
• Cell phone plans – Similar to car insurance providers, cell phone companies will check your credit prior to activating their service. If you have poor credit, it’s possible you will pay more each month for a phone or plan.
• Car loans – Without a good credit score, it may be difficult to secure financing for a car. Those who are able to get a loan with a bad credit score could end up paying up to two percentage points more than someone with stellar credit.