What are the benefits of having a good credit score?
Credit scores play a very important role in your financial future. Good credit scores can be the difference between being accepted instead of denied. They also play a huge role in your interest rates and the amount of money you will pay over the lifetime of a loan, potentially saving you thousands of dollars. Here is an infographic that shows and describes this in further detail.
In addition to lower interest rates, a high credit score can get you a higher credit limit giving you access to more money. If your score is gradually increasing, your credit card company will usually offer you a higher line of credit. Having a good credit score is also a great negotiating tool, you can easily negotiate more affordable payment plans, better interest rates on your credit accounts, and even better insurance rates.
Here are 7 benefits of having a good credit score.
Low interest rates on credit cards and loans: When you borrow money, you have to pay back the money and-then-some in interest. The interest rate that you get on that borrowed money is usually directly tied to your credit score. If you have good credit you will almost always get a lower interest rate and you will pay a lot less over the lifetime of that loan. That frees up extra money for you to do with what you want, including adding extra money to pay off the loan faster.
Better chance for credit card and loan approval: If you have a bad credit score, it will be very difficult to be approved for a credit card or any type of loan. This is because a big part of the lender’s decision in lending you money is based on your credit score. But lenders also consider other factors like your income and your debt. However, having a good credit score gives you a very good chance of getting approved.
More negotiating power: If you have a good credit score it gives you leverage to negotiate lower interest rates on your credit accounts. It also gives you leverage on getting better insurance rates, lower payments on payment plans, etc.
Get approved for higher limits: Your borrowing capacity is based on your income and your credit score. One of the benefits of having a good credit score is that you will likely be able to borrow more money because you have demonstrated that you can pay back what you borrow on time. This gives you a lot more financial flexibility and opens up a lot more opportunity for you.
Easier approval for rental houses and apartments: More and more landlords are starting to use credit scores as a factor in allowing tenants to rent from them. A good credit score shows that you are financially responsible to make payments on time. Having a good credit score allows you to not worry about finding a landlord who will overlook bad credit.
Better insurance rates: Insurance companies claim that people with bad credit tend to file more claims so they penalize these people with higher insurance premiums. If you have a good credit score, you will pay less for insurance than someone with bad credit.
Get a cell phone on contract without a security deposit: If you have bad credit, cell phone service providers will be cautious and may not give you a contract. You may be forced into one of those pay-as-you-go plans that end up being more expensive. If you have good credit you can get away with not paying a security deposit and you can get a discount on the latest phones by signing a contract with the provider as well.
These are a few of the many good credit score benefits.