You’ve found your dream house. The neighborhood is perfect. The schools are great. The kitchen has everything you want.

You’ve negotiated a good price. You’ve signed reams of paperwork. And you open an escrow account.

Then your mortgage broker calls. Remember the great interest rate she quoted you last week? You don’t qualify for it. She says there are some problems with your FICO score. Your interest rate is going to be higher by almost four percentage points.
Suddenly, your monthly payments on a $200,000 loan jump from $1,150 to $1,620. That’s a 40 percent increase!
Your eyes well up with tears as that dream house slips away—along with the nonrefundable deposit check you’d written. And it’s all because the mortgage lenders said your credit score was low.

Buying a house is the single biggest purchase most consumers will ever make—and the vast majority of people buy that house on credit. But home buying isn’t the only time your credit is important.

Your credit is a factor when you want to rent an apartment, buy a car, get braces for your children or take advantage of a “no interest for six months” offer on a big-screen TV. Sometimes, your credit history will even come into play when you apply for insurance or for a job.

Credit history plays a vital role in your day-to-day life, making expenses like a home mortgage more—or less—expensive for you. And it’s practically impossible to rent a car without a credit card.