5 benefits you can only get with a high credit score

You probably know that a good credit score is important, and you might also know that your credit rating affects the likelihood of you being approved for a loan or credit card, but that’s not all. A good or excellent credit score – typically a score of 670 or higher – can earn you a number of other benefits that those with average or poor credit may not have access to. Here are five of them.

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1. Low interest rates on credit cards and loans

Your credit score doesn’t just determine the likelihood of you being approved for a credit card or loan. It also determines the interest rate you get when you are approved. Applicants with excellent credit will receive the lowest interest rates while those with fair or poor credit will have a higher interest rate, to reflect the increased risk of lending them money.

A lower interest rate could save thousands of dollars, depending on how much you borrow and the length of the loan. Consider $ 10,000 Personal loan with a repayment term of five years. The loan can have a 10% APR if you have great credit, in which case you will end up paying around $ 12,750 in total. But if you only have fair credit, the same loan could have 20% APR and that would end up costing you $ 15,900.

2. Premium credit cards

Premium credit cards are typically travel rewards credit cards that come with high annual fees, but they also offer lucrative rewards including annual travel credits, lounge access, and high credit limits. Card issuers have more stringent qualification requirements for these cards because they don’t want people signing up for the card, enjoying the nice travel rewards, and then not paying their bill.

While credit card issuers almost never list the minimum credit score required to be approved for a card, odds are you’ll need good or great credit to be approved for. one of these cards.

3. Easier time to secure an apartment

Although you don’t need a loan to secure an apartment, many landlords still do a credit check before accepting potential tenants and if you have a bad credit history they may refuse to work with you. , or require a higher security deposit, or a co-signer. But if you keep your credit rating high, landlords will have more confidence in your ability to pay rent each month, and you will be more likely to get the apartment you want.

4. Reduction of insurance premiums

Your credit score is basically a measure of risk, and do you know who likes to rate risk? Insurance companies. Some auto insurers take a look at your credit score when calculating your premiums, indicating that the credit score is an indicator of how likely a person is to file an auto insurance claim. While insurers are not allowed to deny you due to a bad credit rating, they may charge you more money. Keeping your credit score high will help you avoid this penalty.

5. Best mobile phone deals

Yes, even your mobile phone provider examines your credit score to see if you qualify for their promotional offers. Those with poor credit may not be successful and may have to make a larger down payment when buying a new phone. Like lenders, cell phone providers want to make sure that you don’t just pay a bill and then not pay. If they weren’t so discriminating, they wouldn’t stay in business for very long.

How to improve your credit score

So, a high credit score can help you save money and more easily get credit and services you use often, but how do you get a high credit score if you don’t already have one? The first step is to pull your credit reports and see where you stand. Everyone is entitled to one free credit report per bureau per year thanks to AnnualCreditReport.com. Check them out and make sure everything looks right. Notify the credit bureaus and all associated financial institutions if you see anything that looks like an error or could be fraudulent activity.

Then, work on adopting good financial habits. Your payment history is the most important factor in your credit score, so always pay your bills on time and set reminders if you need help remembering them. You should also minimize the amount you charge on your credit cards, as this impacts your credit utilization rate. This ratio compares the amount of credit you use versus the amount you have access to, and a ratio above 30% would indicate heavy reliance on credit and someone living beyond their means.

Don’t ask for new credit too often or for services that the provider will perform a credit check for, like those mentioned above. The lender or service provider might do a thorough credit check on your report, which will lower your credit score by a few points. Credit scoring models take into account normal credit buying behavior. Therefore, if you are applying for a new loan or line of credit, try to submit all of your requests within 30 days. This way they will only be counted as one credit check.

If you can’t get any type of credit, try opening a secured credit card or have someone authorize you to be an authorized user on their credit card. You can also ask your current landlord, if you have one, to report your monthly payments to the credit bureaus to improve your score.

In the end, it all comes down to patience and diligence. Your credit score is supposed to provide a long-term view of how you’ve managed your money, and only consistent good habits can help you achieve a great score.

About Sally Dominguez

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