In general terms, your credit score determines whether you’re financially responsible or not. Your credit score is influenced by your spending habits and your ability to pay back the loan.
It helps financial institutions determine whether or not to provide you with a loan. Apart from access to the best loan options, there are several other benefits of having a good credit score.
1. Lower Interest Rates on Loans and Credit Cards
First of all, a good credit score will get you lower interest rates on loans and credit cards. Hence, borrowing money will be easier for you than if you had bad credit. This comes in handy when taking out loans for business-related or other expenses.
The less money you will pay in interest, the more you will end up saving. This will only benefit your credit score further and you can get bigger loans. This is ‘how to build your credit score fast 101’ in many respects.
2. Better Negotiating Power
Good credit scores can also put the ball in your court, as they say. You can compare offers from different banks to negotiate on your package better. Bad credit will never give you this kind of negotiating power.
3. Easier Approval for Higher Limits
Banks will let you borrow larger and larger amounts depending on your credit score. As stated previously, it demonstrates how punctual you are with repaying your debts. Even with a bad credit score, you can still get loans. However, these will be small change compared to the ones you can get with good credit.
You can use these loans for anything from personal purchases to investing in stocks. You can even use these loans to invest in the real estate market or get something for your loved ones. It doesn’t matter, just as long as you pay it back on time.
4. Get Approval for Rental Houses and Apartments
Today, scoring tenants on their reliability is dependent on their credit scores. Along with references and bank statements, landlords and property owners ask for credit scores as they determine how regular clients will be with their payments.
The credit score can even go as far as damaging your chances of getting an apartment if it’s bad enough. However, a good credit score immediately increases your chances of putting the landlord at ease. Even without references, the credit score speaks for itself.
5. Better Rates for Car Insurance
Car insurance payments, besides mortgage payments and rent, are the largest expense for any taxpayer. Hence, getting a discount or reduction on the payments is dependent on your credit score. Since it’s an asset that depreciates over time, paying on time is very important. You can pay less for car insurance with great credit scores for sure. Moreover, if you continue to pay on time, it’s one of the best ways to build your credit score.
6. Get a Cell Phone without a Security Deposit
Cell phone service providers now factor in your credit score when giving you a contract. With a bad credit score, you’ll have to choose pay-as-you-go plans that come with more expensive phones. A good credit score absolves you of that choice and you can get contracts with very cheap phones too.
7. You Can Avoid Security Deposits on Utilities
Security deposits on utilities can go as high as $200 in some cases. However, with a good credit score, having that high of a security deposit isn’t necessary. When an established utility service overlooks your credit score, they will feel more comfortable slashing your security deposit.
8. Premium Credit Cards with Better Rewards
A good credit score will help you climb the ladder towards better financial rewards. It will help you get better credit cards with more premium benefits. These can include greater cashback rewards, better discounts, etc.
9. Get Better Healthcare
When you’re going to buy health insurance, a good credit score will come in hand to get you reduced rates. It will also put the company’s mind at ease when you ask for increased coverage. You won’t have a lot of problems getting the kind of healthcare you need if you maintain a good credit score.
10. Employment Benefits
Know that your employers will check your credit report before they hire you. This is to find out whether you’re stable and whether you have been responsible with your finances. This may mean that your employer won’t have faith that you can perform. Unstable finances can impact performance and even result in the employee quitting once they get a better offer. Employers would only want to invest in someone they trust is staying for the long haul.
A good credit score can put your employer’s mind at ease beforehand. They won’t stress over your finances too much and just give them a cursory look. Overall, a good credit score will make sure that finances aren’t a factor when it comes to hiring you.
These benefits are all within reach if you keep your credit score above 800. Make sure to keep paying your bills on time and keep track of your finances. It’s not as hard as you think.
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