Having a good credit score is essential if you need to borrow money to fund your home, car, or tuition funds. Ideally, it’ll be helpful if you could get a credit score of at least 670, which is considered good.
Credit score goes beyond your individual ability to secure a loan. It’s also important if you’re trying to build a good business credit score like from Credit Strong. That said, you should also learn more about the other benefits of getting a good credit score, which is why we have a list of the most important reasons why you should maintain it.
Higher Chance Of Credit Approval
One of the first things that most banks and lenders check when you apply for a loan is your credit score. If you have good credit score, you’re more likely to qualify for a loan in the first place. If this is your first major loan, consider improving your credit score by using rent reporting services like Digital Honey, so you can use your rental data as proof that you’re the type of person who can pay your loans on time.
Lower Interest Rates
Being able to take a loan with lower interest rates would be very helpful since you will basically end up spending a lot less to pay back the loan, as opposed to taking out a loan at regular rates. The better your credit score is, the more likely you are to qualify for low-interest loans.
To make things even better, this can initiate a cycle that can further improve your credit score. Keep in mind that your credit score will improve if you pay your loans on time. Because the loan has lower interest rates, it’s easier to pay. This, in turn, means you’re more likely to get a better credit score to apply for even more loans with better interest rates.
Better Loan Terms
It’s not just the interest rates that get better with a good credit score. This is because having a good credit score also increases the chances of lenders offering you better loan terms. For example, you’d receive a higher credit card limit than someone with a bad credit score, which will be great for emergencies. You’d also be able to take out a bigger instant cash loan.
To put it simply, having a good credit score shows that you’re likely to pay the lender back. Lenders will feel at ease knowing that, which means they’ll be more willing to entrust you with bigger loans or better deals.
Easier Rental House Or Apartment Approval
A good credit score also provides you with other perks not directly related to borrowing cash. The best example of this would be property rentals. Landlords tend to check the credit score of a future tenant as part of their screening process. They want to know whether their prospective tenant has bad credit due to previous evictions or an outstanding balance.
A good credit score gives landlords the idea that you’re a tenant who settles bills on time. This means they’re less likely to get headaches just regularly reminding you to pay up your monthly bills. The same thing applies to other rental properties like vehicle rentals.
Lower House Mortgages
Having more rental options due to good credit score is good, but did you know that your score can also help you with permanent homes? Individuals with high credit scores tend to get the best deal for their mortgages.
The most important part about this advantage is that it gives you more options whether you’re looking for a used property or building a home from scratch. You have a bigger budget to work with, which could be the difference between moving to your dream house or being forced to compromise.
Car Insurance Discounts
Car insurance companies also check your credit score when you are applying. They base their insurance offers on your credit score to develop the right insurance plan for you.
If you have a bad credit score, expect to pay a larger amount than when you have a good credit score. A good credit score allows you to pay less than those people with bad credit scores, and may even qualify for promos that further sweeten the deal.
Avoid Security Deposits on Utilities
Some companies may consider you’re paying your bills on time, allowing them to have your security deposits waived. This could be helpful since you don’t have to take your money out just to sign up for a service, which means you don’t have to deal with a sudden dip in your monthly budget and get access to good service subscriptions that are ‘locked’ behind a high upfront fee.
Knowing that you have a good credit score can give you leverage to haggle and discuss the rates for your application. Should you want a lower interest rate on a credit card or a new loan, you can discuss it further since you can make a better case for yourself with your credit score. Furthermore, because you qualify to more offers, you can use those alternative options as leverage for negotiating. With a bad credit score, you’d be lucky even being able to apply for certain offers, and you’re most likely stuck having to accept whatever the lender’s initial terms are.
While most people know that having a good credit score means getting better loans, there’s more to it than just being able to borrow money. You also get better deals, more options on properties, better insurance, and the power to make good deals even better. That said, maintaining a good credit score takes discipline, but the long-term efforts are worth it.