Traditional financial advice includes saving for an emergency fund, paying down your debt, and living within your means. Also, many experts suggest keeping your credit score as high as possible.
Keeping a high credit score is good for your financial health. It helps you save money in the long run. More importantly, it makes your life easier.
Most people understand that credit scores can have a huge impact on one’s quality of life. Sure, you can survive on bad credit, but you will never know when your credit score could badly hamper a major life decision.
If you still need convincing why you need to work on your credit score, enumerated below are some of the best reasons why having a good credit score works for your advantage.
Easier Approval on Rental and Mortgage Applications
Almost all landlords and rental companies do a credit check on prospective tenants when the latter file their application. Landlords want to do business with a financially responsible candidate.
With a good credit score, not only are you more likely to get approved on your prospective rental apartment, but you also have a wider selection of options.
Having a good credit score also means you can get the best interest rate on your mortgage if you plan on buying a house. Lenders are more eager to approve home loans to applicants with a good credit history.
Secure Low-Interest Rates on Credit Card and Loans
Having a good credit score means you can qualify for low-interest rates on most kinds of personal loans you might need. Whether you need a loan to remodel your house, open a business, or get an auto loan, good credit history is your one-way ticket, among others, in having your loan approved.
With less money spent paying off interest, the faster you will pay off your debt, and the more money you will save. Furthermore, with a good credit score, you have more bargaining power as you negotiate for better terms on a credit card or a new loan.
Score Better Car Insurance Rates
In determining how much your car insurance policy would cost, insurance companies often use your credit report and insurance history. A good credit score typically means you pay less for your car insurance than applicants with credit scores at a lower-range end.
Insurance companies usually penalize people with low credit scores by making them pay higher insurance premiums. A 2007 report by the Federal Trade Commission shows that people with poor credit file more insurance claims than those with higher credit scores, thus the difference in premiums among applicants.
Enjoy Low, Even Zero, Security Deposits
Another perk of having a good credit score is not having to pay security deposits on utilities. To determine whether a consumer can make a timely payment, cell phone, internet, cable, and other electronic providers examine the credit history of their clients. Having a poor credit score means you are often charged with a security deposit to open an account.
Security deposits usually amount to $100 to $200. It is an upfront payment to protect the utility provider in instances where you miss payments. However, with a good credit score, you can avoid such hassle. Utility companies have more faith in consumers with good credit history.
Improve the Chances of Getting Hired
Even in landing a job, you need a good credit score. Employers usually do an extensive background check on applicants, and it might include a check on your credit history.
Although an applicant’s permission is secured first before running a credit check, not granting it would not help your chances of landing the job. Companies want to hire dependable and trustworthy employees. It raises a red flag that you might not be responsible, especially in terms of finances, if your credit score is low.
Final Thoughts
With a good credit score, one does not have to look far from offers because the offers come to you. You can get introductory offers and reward credit cards with VIP perks. A good credit score means you are a trustworthy borrower, and it is something to be proud of. If your credit score is on the high-end range, keep it up.
Nevertheless, if your credit score is on the low-range end, it is not too late for you. A bad credit score can always be repaired. The most important habit to develop to achieve a good credit score is paying your credit card bills on time. Furthermore, living within your means helps you avoid unnecessary debts.