The benefits of having a good credit score are numerous, and they extend far beyond just getting a loan or credit card. If you’re in the market for a new job, for example, having a high credit score can help you get hired.
It helps if you want to rent an apartment or buy a house. It also helps when it comes time to apply for a new cell phone plan. All these are just a few advantages you will have with a good credit score.
Here are 7 of the most common benefits of having a good credit score.
1. A good credit score can save you money.
You can get lower interest rates on loans, which means less money spent on interest. You’ll qualify for better terms on loans and credit cards, making acquisitions more accessible. Consequently, you can obtain the things you want without enduring lengthy payment periods.
Lenders may be willing to offer you better terms (including lower interest rates) on loans such as mortgages and student loans if they see that your finances are sound and stable.
2. You’ll pay less for car insurance.
You can also save money on your auto insurance. Insurance companies use your credit score as a way to determine how likely you are to file a claim, and if you have a low score, that may mean higher premiums for you.
For example, according to the Insurance Information Institute (III), someone with perfect credit might pay $567 per year in car insurance versus $1,444 for someone with poor credit.
So if your score is good and your driving history is solid, be rest assured that your car insurance will be way much lesser than that of someone with a poor credit history.
3. You may get approved for credit cards with great rewards.
Having a good credit score can help you get approved for credit cards with great rewards. If you have a lower credit score, it may be challenging for you to get approved for these kinds of cards.
It’s important to remember that having a good credit score does not guarantee that you’ll be approved for the best rewards cards on the market. You’ll need to check out each card individually and see what it has to offer before deciding which one is right for you.
4. You’ll be approved for rental property.
A good credit score can help you get approved for rental property. A landlord may seek to review your credit score before consenting to rent to you, particularly in pursuit of a reliable tenant. A good credit history, when viewed by a landlord, reflects your responsible money management. This positive financial behavior can signal a trustworthy tenant for future engagements.
A bad credit score on the other hand can be a red flag for a landlord. A bad credit score could mean that there is something wrong with how well organized and responsible someone is with their finances (or lack thereof).
5. It may be easier to get a mortgage.
I If you’re thinking about buying a house, you might want to take a second look at your credit score. You can be approved for a loan with lower interest rates and less money down.
With home prices on the rise, affording monthly mortgage payments has become increasingly crucial. A good credit score significantly eases the process of obtaining a mortgage. Moreover, it opens the door to mortgages with much lower interest rates, making home ownership more financially manageable.
In addition, a good credit score can even get you a great mortgage deal with just little down-payment required. This is really good if you don’t have enough of saved up money.
6. It could help you land a job.
According to the Consumer Federation of America (CFA), an employer can use your credit history to determine if you’re trustworthy enough to hire. This means that if they see that you have a bad or no credit history, they may assume that it’s because of poor financial decisions and not hire you.
However, having a good credit score, or preferably higher, showcases responsible financial decisions. This demonstration of responsibility and reliability in money management can impress employers. As a result, it may lead to better pay and benefits at work. This link between credit scores and workplace rewards underscores the broader impact of financial prudence.
7. A good credit score can help you get a lower car payment
Having a good credit score simplifies the process of qualifying for a car loan with lower interest rates. When venturing to buy a new car or secure a car loan, this advantage plays a pivotal role. Consequently, you may find yourself paying less in monthly installments, easing your financial commitments.
Higher down payments mean higher monthly payments and higher insurance premiums. A low down payment can reduce the amount of money you owe on the vehicle, which will make your monthly costs lower and make them easier to afford.
Bottom Line
Have an excellent credit score, and the benefits could be yours. Keep in mind that having a good score includes keeping it consistently good over a period of time.
Managing your credit well will add years of financial security to your life and help you build wealth. And you don’t have to spend a fortune to have this kind of good credit. All it takes is practice good habits and smart spending.
If you want to know how to get an excellent credit rating, read these tips on 10 simple ways to improve your credit score. But if you don’t know your credit score, you can check our guide on how to get your free credit report in 3 simple steps.
