In today’s marketplace, a good credit score is a valuable asset. You may not even think about some of the ways your credit score helps or hinders you financially because it is such a widespread feature of making purchases and doing business in the modern marketplace. Here are five benefits of having a good credit score.
Easier Approval for Renting Housing
If you are looking for rental property including houses, apartments, and condominiums, a poor credit score can make being approved to move into your first choices difficult. Landlords often check credit as part of the screening process. Low scores, especially if you have penalties involving rentals such as evictions or outstanding fees, make the rental process challenging. Before you begin the process of looking for a new place to rent, take the time for a credit check from a reliable source. If the score is lower than you would like it to be, you can take steps to raise it.
No Security Deposits for Utility Hookups
Many of the benefits of good credit scores come with big life decisions such as large purchases and moving. A good credit score helps save you money when you move by negating the need for large security deposits for utility hookups. Fees of several hundred dollars can be inconvenient and even cause financial problems during the relocation process. In addition, you cannot predict if a natural disaster or a structural problem such as with plumbing or other issues may require you to move suddenly.
Reduced Vehicle Insurance Rates
Insurance companies examine your credit score to ultimately decide your premium rates. Applicants with good credit scores have an advantage. The system companies use may be complex, but the final result is that those with low credit scores will pay more for their policies than will those with good or excellent scores. Insurance companies frequently penalize those with poor scores by charging higher premiums, even if they are similar in other aspects to applicants who pay less due to good credit.
No Security Deposit for Mobile Phones
Sometimes you need to quickly replace a mobile phone that has been lost or destroyed. Other times, you may want a new model. If you want a new phone for whatever reason, take heed: A good credit score helps in multiple ways, including:
- Contracts with affordable plans
- Lower rates from the beginning of the contract
- No security deposit
- Lower prices on new phones
Poor credit may mean you have to choose a pay-as-you-go option, which ultimately costs you more. In addition, you may not be able to get the phone model you want.
Lower Interest Rates
When you borrow money, you also take on repaying interest for the privilege of borrowing funds. Several key factors determine interest rates, and one of the most important is credit scores. A good credit score helps you get lower interest rates, which in turn means you pay less to borrow money. This allows you to repay the loan faster. The benefit of lower interest rates applies to multiple types of loans, including credit card finance charges.
Planning Ahead for Good Credit
The best way to raise your credit score and keep it strong is proactive planning. Avoid impetuous purchases generally and make repaying mid-size necessary purchases a priority in your monthly budget. Regular repayments help you build your credit history and show you to be trustworthy.
A good credit reputation helps you when it is time to make large buying decisions. Buying a house, moving to a rental condominium or townhome, and buying a vehicle all become easier with a good credit score. When lenders consider you to be a low risk, you benefit from more convenience, increased freedom of choice, and lower rates.