Your credit score is one of the most important numbers in your life. It can determine everything from the rate you get on a car loan to whether you are approved for a mortgage.
With over 11.1% of Americans having a credit score below 550, having a good credit history is critical. A high credit score means that you’re a low-risk borrower. Therefore, lenders will be more likely to give you favorable terms on a loan.
There are many more benefits of good credit that go beyond just getting loans at a lower interest rate. Maintaining a good credit score is also important for your overall financial well-being. Below are ten benefits of maintaining good credit:
1. Lower Credit Card Interest
A good credit score means you pay less interest on your credit card balances. This can save you thousands of dollars in interest charges if you have revolving debt on a high-interest rate credit card.
Credit card companies often look at your credit score to determine if you’re a good candidate for lower interest rates. A good credit score also comes in handy if you want to upgrade or apply for a new credit card.
2. Save on Your Car Loan
Your credit score is also important when getting approved for an auto loan. A good credit rating can help you qualify for better car loans with lower monthly payments and possibly even no down payment at all.
If your credit score is low, you may have to pay a higher interest rate. You could even be denied a car loan altogether. Maintaining a good credit score is the key to saving money on your car loan.
3. Lower Insurance Premiums
Insurers sometimes look at your credit score to determine how much of a risk you are.
A high credit score usually indicates that you’re more responsible with money and less likely to file a claim. On the other hand, a bad credit score can increase rates and even lead to coverage denial.
4. Rent an Apartment Easier
If you’re looking for a new place to live, your credit score will come in handy. Most landlords conduct a credit check before renting out an apartment.
If you have a low credit score, you may not be approved for the rental, or you could be required to pay a higher security deposit. Having an excellent credit history is a great way to make sure you can easily rent the apartment of your dreams.
5. Approved for Credit Cards Faster
If you’re in the market for a new credit card, maintaining good credit will help speed up the approval process. Credit card issuers often look at your credit score before approving your application. If your rating isn’t good, they may deny your request or give you a lower credit limit with higher interest rates.
Maintaining good credit is important if you want the best terms on your new credit card application. Plus, it will make things easier when applying for other types of loans or financing in the future.
6. Easier Time Applying for Student Loans
If you’re applying for a student loan, your credit score is considered along with other factors such as income and employment history.
If your credit score isn’t up to par, it could impact the amount of money you can borrow or prevent you from getting approved altogether. Maintaining good credit will make it easier for you to get a student loan when you need one.
7. Quick Approval in an Emergency Situation
Emergencies like car repairs or medical expenses can be very stressful. The last thing you need is to worry about money. But if your credit score is good, you can get approved for a loan quickly and easily.
This is one of the benefits of having a good credit score; it gives you peace of mind in times of need. This reduces the burden and stress you may experience in such situations.
8. You Can Qualify for a Mortgage
A mortgage is a big commitment. That’s why it’s important to have a good credit score before applying. If your credit rating isn’t up to par, you may not be approved for the mortgage, or you could be offered a high-interest rate.
Mortgage lenders often run credit checks to ensure that you can make your monthly payments on time.
9. Better Terms When You Refinance Your Mortgage
Your credit score is an essential factor when refinancing your mortgage. A low credit rating could mean that you’re not approved or may have to pay higher fees during the process. Maintaining a high credit score will help simplify this process so that it goes smoothly and quickly with no hassles at all.
Refinancing a mortgage can help you save money on your monthly payments, so it’s important to have good credit.
10. Higher Credit Limits
Credit limits are the maximum amount of money you’re allowed to borrow. A high credit score means that you can qualify for a higher credit limit, which is helpful if you need to make a large purchase or take out a loan.
Having a high credit limit also gives you more financial flexibility and peace of mind. It’s nice to know that you have room to grow should an unexpected expense come up.
Now You Know the Benefits of Good Credit
Now that you know the benefits of good credit, it’s essential to take steps to maintain the score. Credit scores can fluctuate over time, so it’s important to check them regularly and ensure they’re still high. Otherwise, you could be missing out on benefits that only those with good credit have access to.
Maintaining good credit can be quite challenging. But with our Credit Score Blueprint, you can easily repair your credit. Sign up for the ultimate do-it-yourself (DIY) masterclass for credit repair.