5 times your credit score will be checked
Your credit score is sort of like a 'one size fits all' solution for assessment. Whether it's a lender or someone else entirely doing the assessing, a credit score provides a pretty useful metric for determining a person's basic level of financial—and by extension, general—responsibility.
That's why it's so common for people's credit scores to be checked; or at least, requested to be checked. Those three-digit numbers reveal a heck of a lot, which is why it's important for everyone to keep tabs on their own personal credit scores, probing regularly for discrepancies. If you suddenly need to have a serious check done, perhaps for one of the situations we'll get into below, you'll be glad you did.
1. Renting a new apartment
Imagine you're a landlord. You're showing one of your apartment units and have about 12 different applicants that are all serious about taking it. They all assure you that their finances are in good shape and extol the virtues they would bring to the table as tenants: minimal noise, cleanliness, etc. How do you differentiate between their candidacies?
With a credit score, that's how!
A credit score gives landlords a simple yet fairly precise snapshot of a person's financial history. People make mistakes, and, to be sure, it's unreasonable to expect someone to be inextricably tied to his or her financial history forever. However, landlords need to be able to make sound decisions, and when the competition is tight, it's fair for them to want that window into someone's past.
2. Securing a mortgage
Mortgages don't get handed out to just anyone. The 2008 housing crisis is still fresh in a lot of people's minds, and no lender wants to make the mistake of giving money to a complete no-show.
Securing a mortgage in the first place will likely require a fairly solid credit score—something over 620 or so—but even beyond that, getting a good mortgage rate could be partially reliant on credit score as well. These are discussions you will have to have with your bank, or whoever else is lending to you.
3. Buying a car
Your credit score is probably the single biggest factor in determining what kind of a payment rate you negotiate for a car loan. Because cars are essentially the largest purchase that most people make in their lifetimes outside of a home—and even then, many people spend their entire lives renting—lenders take that credit score extremely seriously.
As with home financing, good credit scores attract the best interest rates. Though this can be seen as a somewhat unfair scenario because it makes it even harder for people with past financial difficulties to purchase cars, it's just the reality of how financing works. Credit scores really matter.
4. Starting a business
Most small businesses fail, so you can probably understand the desire on the part of lenders to be reasonably confident in who they're lending to. The inherent risk of starting a business just amplifies that need to check up on someone's financial history. Loaning standards might be slightly lower if an entrepreneur were to try and secure funds through a personal loan, rather than a business one, but that could be extremely risky, given the potential for failure.
5. Taking out a new credit card
Yes, credit history is indeed a prerequisite for new credit. While some lines of credit will require surprisingly little proof of reliability, most call for at least some form of screening. Most of the major banks that offer widely released credit cards (BMO, TD, etc.) will have some sort of credit score threshold that they use as a benchmark for who to issue new cards to. Bear that in mind before you go shopping around for a new card and get prematurely attached to one.