Credit scores are used by banks and other lenders who provide loans, mortgages, credit card companies, and even car dealers financing auto purchases, to make decisions about whether or not to offer you credit and what the terms of the offer (such as the interest rate or down payment) will be. With your hard-earned money being so important, your credit score becomes just as valuable. While you can survive with a bad credit score, it makes life unnecessarily difficult. So, why do we need a good credit?
Well, a good credit score is very helpful when you are trying to save money. It also helps when you apply for loans and insurance. In some places, it even affects the type of house you can rent or buy and the type of job you can get.
There are of course many other benefits to having a good credit score, and this is what we will be discussing in this article. Here are 8 benefits of having a good credit score.
1. Better credit cards and higher chances of loan approvals
A bad credit score indicates a poor payment record, and few banks and lenders are willing to risk doing business with someone with a low credit score. Having a good credit score, on the other hand, shows that you are responsible and diligent when it comes to making payments. This means that you lower your risks as a borrower, and so banks and lenders will be more likely to approve your credit applications.
2. More negotiating power
When you have a good credit score, you have more leverage to negotiate lower interest rates on new credit cards and loans. Why? Because banks and lenders can see that you’re more capable of paying them back diligently and so will be more open to offering you better repayment plans.
3. Better interest rates
The interest rate is one of the costs you must pay when you borrow money, and these rates are usually tied to your credit score. Obviously, the higher your interest rate, the more money you need to pay, which is hardly good for your finances. However, with a good credit score you’ll almost always qualify for low-interest rates and thus will be charged less on credit card balances and loans.
4. Get approved for higher credit limits
When you give your credit application, banks and lenders will look at your income and credit score before they approve it. When you have a good credit score, banks and lenders are willing to let you borrow more and thus will give you a higher credit limit. This is because your score shows that you pay back your borrowed money on time. Some loans may be approved even with a bad credit score; however, the amount you can borrow will be significantly lower.
5. Better mortgage rates
Like most other loans, banks and lenders are more likely to give an attractive rate on your home loan when you have a good credit score. Someone with a good credit score is an ideal customer for banks and lenders. So they will be more than happy to attract you with better deals
6. Faster credit approval
Nobody likes waiting a long time for a credit application to be approved. Well, your credit score is connected to the speed of your approval; a bad score will mean a slower approval process with greater background checks, and a good score will mean a faster okay.
7. Better credit card deals
The most attractive credit card deals come with perks such as low-interest rates, better reward programs, cash back deals, higher credit limit, admissions to Plaza Premium Lounges at airports, discounts and zero annual fees. These exclusive credit cards are only accessible to people who have high credit scores. What’s more, as long as you keep up your credit savvy habits, banks will be willing to approve better deals in the future.
8. Better car loans and auto insurance
Looking for a new car? With a good credit score, you will have more bargaining power and you may be given access to better deals and better car insurance rates. Insurance companies will often look at your credit score when evaluating what kind of rates they should offer.
9. Enjoy a less stressful life
With today’s hectic lifestyles, knowing that your financial transactions are secure and that most of them will go along smoothly is a huge weight off your mind. And that is almost guaranteed when you have a good credit score. Remember a healthy mind is a happy mind, and what makes a mind happier than lack of stress?
Your credit score plays an important role in how you shape your financial future. Keeping a healthy credit score helps you immensely when making plans for a secure future, so keep these points in mind when you are making an important financial transaction and be sure to keep that credit score high.
Want to know more about how your credit score can affect you? Talk to us, send your questions to firstname.lastname@example.org or call us at 012-299-6155 or 037-450-6655.
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