There are many benefits to having a good credit score. It will help you save money and make it easier for you to manage your financial affairs. Although it is not impossible to live with bad credit, it will require you to shell out more of your liquidity and it makes a lot of things expensive. The most common reason as to why it’s important to have a good score is that it’s easier to get a loan or a credit card approved. However, there are a lot of things that are born out of this standing that’ll be beneficial to you, short and long term.
Here are some of the benefits of having an outstanding credit score:
1. Credit Cards and Loans have Lower Interest Rates.
The interest rate is partly the cost of borrowing money. Determining it is directly affected by your credit score. Borrowers with better scores will be given the most approval for loans and credit cards. This will give them the chance to have a wider option and compare rates. Because of their standing, they are qualified to get the best deal on the interest rates and will have lower charges on balances on their credit card and loans. In short, the less money you spend on the interests, the quicker you can pay off what you borrowed and you’ll have more bandwidth for your other expenditures.
2. Higher Approval Rate for Loans and Credit Cards.
People with subpar credit history usually don’t like applying for a new credit card or loan. The previous rejection will have lowered their chances of getting approved at the next one. Although a better credit standing doesn’t guarantee that you’ll get approved, because there are other factors like income and liabilities that lenders consider. Still, it can give you the confidence to apply for a loan or financing that you might need. Consistently paying your dues in a timely manner will improve your credit history and can get you a better chance of approval on that loan you’re applying.
3. Leverage for Negotiation
As mentioned above, you will have the benefit of having lower interest rates, so combine that with other factors that will get you approved, you will have leverage in negotiating for a better loan. You can also take advantage of the perks that credit card companies give to their clients. Conversely, poor credit history will likely give you strict and rigid terms on the loan minus the perks and credit offer they’ll give to those with good standing.
4. Credit Offers and Perks
You can get rewards and other perks from premium credit cards. They may have higher fees, but they also offer luxurious perks. This may include travel credits, access to the VIP lounge, and a higher credit limit. You can check your credit report and look for ways to improve. With a better credit score, you can qualify for hard to get rewards. Breaking down the elements on how to get your standing upgraded is one of the more effective ways to achieve your desired score. Looking into your history, current status, and the types of credit you’re applying will give a better gauge on how to get your hands on those valuable rewards.
5. Higher Credit Limits
Aside from getting approved and having lower interest rates, an excellent score on your credit will give lenders the confidence to let you borrow more. The credit limit is based on your income and credit score, this will show the bank that you have the capacity and that you have a record that says you pay your dues on time. Despite a bad credit score will still get approved for some loans, they’ll limit the amount they’ll let you borrow.
6. Insurance Rates are Better
Insurance companies tend to use your credit scores to determine the premiums you’ll be paying them. A person with bad credit is likely to pay more premium than someone applying for the same coverage with a better credit standing. Although the insurance score is not the same as the bank’s credit score, the figures correlate with each other.
7. Prevent Security Deposits on Utilities
If you are forced to move to a new place paying an advance on the utility is an inconvenience that you’ll have to face. However, with a good credit score, you can avoid that altogether because the company will have the confidence that you pay your fees regularly.
8. Better Chance on Approval for Apartments
Landlords will use your credit points as part of their screening process to let you be a tenant. A bad record that resulted in eviction from your previous apartment, as well as outstanding balance, will not bode well for you. Having good credit will save you time and energy looking for a good place to rent so you can settle in immediately.
9. No Deposits on Phones
Phone companies will look into your record to see if you’re qualified for a plan. These contracts are usually good because of the lower rates they incur. However, if you don’t qualify because of your scores you will be offered a Pay As You Go plan that entails an expensive unit which will make your monthly dues even higher. If you intend to go for the contract even with poor credit, you’ll be paying higher until you have established yourself. Conversely, having a better credit standing will allow you to avoid security deposits and you will have discounts on the latest phones if you sign up with them.
10. Better Job Opportunities
If you’re applying for a job they may want to see your credit score. Poor credit history might look to them as a distraction that you won’t be able to perform fully. This is also a trend in financial institutions, where you’ll be handling sensitive information about other people’s finances. They tend to choose people that are not having severe debt problems and are of good credit standing.
Ultimately, it takes patience and discipline in achieving and maintaining excellent credit. The score is used to give you a view of how you handle your finances. Having one is something you can be proud of as it is not easy and it only takes a few missed payments to lose your way. It is also a reflection of the good habits that you practice consistently.