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It takes work and effort to get a high score. You need to be careful about paying your bills on time and avoid using your credit cards too much.
Plus, you must ensure you don’t get too far into debt. Many people just don’t put that kind of effort and work into the process and may just let their scores fall. After all, you can still get through life with an average or even bad credit score.
On the other hand, you can get perks, bonuses, and even low-interest loans, which will make it a whole lot easier for you to accomplish the other goals you have in life. So, we’ll look at some of the specific benefits you’ll be entitled to when you get your credit score up.
1. Pay Less Interest
Interest rates are going to follow you any time you borrow money. But the rate that you pay is going to be different depending on your credit score. If you have a good credit score you’ll get better interest rates on any money that you take out.
Someone with a good credit score is going to qualify for better rates or even the best possible rates and they’re going to have lower charges when it comes to taking out loans of any kind.
If your interest rate is lower that means you’re going to pay less interest and you’re going to pay off the loan faster. That means you’re going to have more money to do other things with. Even just a single percentage point over a 30-year mortgage could be the difference between 10’s of thousands of dollars.
You’ll end up in a positive cycle of better credit, easier to manage debt and even better credit. It just keeps going around and around.
In this chart compiled with LendingTree customer data, you can see that those with a 720+ credit score pay an average of 7.63%. At the other end of the scale, for those with a poor credit rating of less than 560, the rate shoots up to an eye-watering 113%.
2. Better Insurance Rates
Did you know that your insurance rates are actually tied to your credit score as well? It’s a strange but true fact that you may not have even thought about. People that have better credit scores are generally more likely to get lower insurance rates.
The thing is that if you have a low credit score insurance companies think that you’re more likely to file a claim. They’re not allowed to deny you coverage because of your score, but they can increase the amount that you have to pay every month. That means you’re going to end up paying more.
If you have a low credit-based insurance score you can end up with high rates on insurance for anything that you might need, from your house to your car and more.
3. Choose From The Best Credit Cards
You’ve seen all the ads for those great credit cards, right? The ones that advertise all that money back and the lowest rates and the best rewards? Well, those are credit cards that you need to have a specific credit score in order to get.
If your credit isn’t great, you might have trouble getting approved for a credit card. But with good credit, you could enjoy lower interest rates, fewer fees, better rewards, and higher credit limits. This makes it easier to make purchases and manage your finances the way you want.
If you have a larger credit limit it’s actually going to increase your credit over time because it shows that you can be trusted with that type of responsibility. As you continue to showcase this the banks you work with will be more likely to trust you with more money for anything you might need.
4. Higher Chances For Loan Approval
If you have bad credit you’ve probably been turned down for a loan in the past, right? But if you have good credit that’s less likely to happen. That’s not to say that it doesn’t happen, because things like income and current debt are also evaluated, but it’s less likely.
If you have a good score you can likely feel comfortable applying for a new loan and expecting to get approved.
5. Easier Rentals and Leases
A landlord is actually able to pull your credit score before they agree to rent or lease an apartment to you.
With the ratings and the information that they get, they can make a decision whether you get that rental or you don’t and that’s going to mean the difference between what’s potentially your dream and something else entirely. Of course, even if you do get approved you may have some other problems.
You could end up with a larger security deposit because you have bad credit or some other side effects that make it more complicated for you to rent.
6. Ability To Negotiate (And Win)
When you go to negotiate anything you’re going to have more control and more power if you actually have great credit. You’ll be able to sit at that table where you’re trying to get a loan or a mortgage and counter the offer you’re given.
Your bank wants to make a deal with you because they know they’re going to get their money back and that is going to make you a prime candidate for them to offer the absolute best that they can.
When you're the ideal candidate, lenders are more likely to compete for your business. Good credit makes you appear more reliable and financially stable, which increases your chances of getting better offers. Essentially, you become a more attractive option, so it's important to use that to your advantage and secure the best deals for yourself.
Get a lower interest, increase your credit limit easily and get more credit and get a more convenient repayment plan. Use your credit score as a bargaining chip. You worked hard for it.
7. Get a New Job
Employers are generally going to ask to see your credit score and while you have the right to refuse, it’s generally not a good idea to do it.
If you show up with bankruptcies, late payments or more, they might not want to make an offer to you. They may feel like you’re more likely to be a less-than-stellar employee because you’re struggling with those financial problems.
If you have a good credit score and you pay your bills on time, you’re going to have a much higher chance of getting a job, getting an apartment and getting anything else that you want.
8. Higher Credit Limit
If you have a higher credit score you’re more likely to get approved for a higher credit limit. That means you’re going to have more money at your disposal and you’re going to have the ability to buy larger items. Plus, you’re going to have a much lower debt-to-credit ratio (if you’re smart about your spending).
If you use less than 30% of your available credit you’re going to increase your credit substantially and that’s definitely going to be worth it.
This chart created with Experian data, highlights the significant increase in the average credit card limits in the last decade. Credit card limits have consistently increased with an overall increase in the recent 10 years.
9. Cheaper Utility Services
Did you know that your utility company also looks at your credit score? They do and they may not want you as a customer if you have a history of debt or missed payments. They can even charge you a deposit before they take you on.
Keep in mind that you’re going to have service fees and additional charges associated with your utilities too and those can be higher if you don’t have good credit. With good credit you may be able to waive some or all of these fees.
Bottom Line
Getting great credit is going to be hard. You’re going to have a long process to it and you’re definitely going to have to be realistic along the way. You’re going to have to stick with a budget. Also, you’re going to have to pay attention to when your bills are due.
But if you do it, you’re going to have a whole lot of savings on everything from your mortgage to your interest rates and you’re going to have a better chance of getting the apartment and the job that you’re looking for.
