Our credit scores are of the utmost importance to our financial health. This assertion can be backed by the fact that a good credit score will unlock many benefits, whereas a bad credit score will put you in a financial mess. It is worthy to note that while most people rely on credit to finance their major purchases, lenders on their part often take into consideration things like credit scores and credit history before giving out loans or lending items. That said, a good credit score comes with many advantages, including the following.
1 – Low rates of interest on credit cards and loans
One of the major benefits of a good credit score is the fact that it lowers your interest rates on credit cards and loans. This is so because with a good credit score you are more likely to qualify for the best interest rates. You might also be charged less for credit card balances and loans, thereby making it possible for you to pay your debts faster while simultaneously having enough for other expenses.
2 – Better terms on loans
With a good credit score, you are also likely to have better terms on loans and credit products since lenders are always eager to lend to reliable people. This allows you to compare rates and shop around more effectively. You are also more likely to gain access to larger amounts of credit and bigger loans, which can make financing big purchases and investments easier.
The money you save by having a good credit score makes it worthwhile to invest in improving said score before a major purchase. There are plenty of companies that specialize in helping clients improve their credit scores, as highlighted in this Sky Blue vs Lexington Law review, which looked at two of the biggest players in the credit repair market.
3 – Easier Approval for Rental properties
Nowadays, most landlords use credit scores as a means to screen their tenants. Meaning that a bad credit score — which can be caused by situations such as an outstanding rental balance or a previous eviction — can severely damage your chances of renting a house or an apartment. However, with a good credit score, you can easily rent any property of your choice.
4 – Better auto insurance rates
Asides from landlords, car insurance companies also use credit scores to screen their clients. These companies use information from your history and credit report to analyze how reliable and trustworthy you are. A bad credit score can lead to bigger insurance premiums.
5 – Avoids security deposits on utilities
Another advantage of having a good credit score is that you can avoid security deposits on utilities. Bear in mind that these deposits — which sometimes amount to $100 to $200 — can be a huge inconvenience especially when you are forced to relocate under unforeseen circumstances. Nevertheless, with a good credit score, you do not necessarily need to pay a security deposit whenever you establish utility service in your name or transfer to another location.
Interesting Related Article: “How to Repay Loan Quickly While Also Improve Your Credit Score“