A credit score is a number that lenders use to help determine whether you’re a good candidate for certain loans. There are many benefits of having a good credit score. To begin with, you would be looked at more favourably by financial and educational institutions if you have a good credit score.
You can also enjoy other benefits, like finding better deals on car insurance and getting mortgage rates that are more affordable. In fact, if you play it right, you could qualify for housing loans to buy expensive properties (from the likes of these Million Pound Mortgage Brokers – LDN Private Clients). Let’s find out what the top 6 benefits of having a good credit score actually are.
Low-Interest Rates on Loans and Credit Cards
A good credit score can help you qualify for a loan or credit card at a lower interest rate. It can also make it easier to get approved for a loan or credit card in the first place.
One of the fees associated with borrowing money is the interest rate, and you frequently receive a rate directly correlated with your credit score. You’ll usually be eligible for better interest rates and pay less in finance fees on loans and credit card balances if you have a high credit score. The less interest you spend, the faster the loan will be paid off and the more money you’ll have left over for other obligations.
Better Chance of Getting Approved for a Loan
A good credit score can make your life easier in many ways. For example, it can help you get approved for a loan. Due to repeated rejections, borrowers with bad credit often avoid applying for new credit cards or loans. Having a high credit score does not ensure acceptance because lenders still take your income and debt into account. However, having a high credit score boosts your likelihood of obtaining new credit. In other words, you can confidently apply for personal loans, business loans, or even real estate ones like mortgages and Short Term Rental Loans.
Higher Credit Limits
If your credit score is high, you may be qualified for bigger loans, such as the jumbo loans required to obtain a mortgage in some regions with a high cost of living. You might potentially be eligible for credit cards with greater limits.
It’s important to note that because the length of your credit history affects your overall score, Baby Boomers have had more time to establish strong credit. This means that a Baby Boomer with a score of 731 can have a credit card limit of almost $40,000. However, the average Millennial under 35 with a credit score of 668 may only have a credit limit of about $20,000.
Ability to Negotiate Rates
Your ability to negotiate for a reduced interest rate on your credit card or new loan depends on your credit score. You won’t have access to additional credit options or offers if you have a low score because creditors will not modify the terms of your loan. You can benefit from other alluring offers you’ve obtained from other businesses depending on your credit rating if you need more negotiating leverage.
Better Auto Insurance Rates
A good credit score can help you get lower auto insurance rates than someone with a bad credit score. Many insurance companies use your credit history as part of their decision-making process when it comes to rates.
Insurance firms create your insurance risk score using information from your credit report and insurance history. Thus, they frequently penalize persons with low credit scores by raising their insurance premiums.
Easier Approval for Apartments and Rental Houses
A good credit score can make it easier for you to get approved for apartments and rental houses. Credit scores are now being used by more landlords during the tenant screening process. Landlords are being strict in the screening process because they want to avoid encountering problems later on especially when it comes to collecting rental fees.
Poor credit can seriously hurt your chances of renting an apartment, particularly if it’s brought on by a prior eviction or unpaid rent. By having a decent credit score, you can avoid the time and stress of looking for a landlord who will approve renters with bad credit.
Improve Your Credit Score and Enjoy More Benefits
You must improve your credit score if you want more options and higher limits for loans and other financial products. Start by building a good history of transactions and payments. There should be no delinquencies and defaults so lenders will trust you more as a borrower.
