A credit score is not just some random number, it has a great importance which can significantly impact your financial life. A good credit score has a lot of benefits; from getting credit cards that offer better reward points, better rate of interest, low annual fees, access to mortgage loans, car loans and much more. It is not that you cannot survive on a bad credit score, but your life will be much more costly. Here are some paybacks of a good credit score which can motivate you to build one for yourself.
Higher Chances of Loan Approval: The chances of getting a new credit card or a loan are low when you have a bad credit history as you are considered as untrustworthy and your applications will be turned down. But on the other hand, if you have a good score, the chances of approval are high, and you can apply with greater confidence. Banks and lenders see you as less-risky as they are more likely to get paid back for the loan they provide.
Lesser Interest Rates: A credit score is a major criterion when the rate of interest is calculated on your loan application or credit card borrowings. If you have a good credit, you will end up paying a lesser rate of interest and pay a lower financial fee for loans and balances. You can use the money you save on the rate of interest to repay the loan faster. Moreover, you have greater negotiating power when you have a good credit as you can bargain showing various offers that you have got from other lenders. On the contrary, if you have a low score then you will have fewer offers and fewer chances of getting good deals.
Higher Credit Limit: A good credit score implies that you have a proven track record of being creditworthy. So lenders are more than willing to increase the credit limit provided the income to debt ratio is high along with a good credit score. Using that you can apply for an increase in credit limit or get approved loans easily and quickly. A higher credit limit implies better savings for you and a guaranteed payback for the lending institutions.
Easy to Rent an Apartment: Landlords are checking the credit score of their prospective tenants like lenders as they want to ensure that the person who is renting their property can pay the rent on time every month. A bad credit score or a balance in the previous rent is an ominous sign of the landlord and you may not be able to rent an apartment. Having a good credit score will ensure that you can rent the apartment you like without any hassles.
Zero or Low Security Deposits: Security deposits on utilities like water, electricity, and a phone is a major setback by a few hundred dollars. When you have a good credit score, you can get these without having to pay so much money as a security deposit. If you pay your bills on time, the service providers will reduce the amount as you are a valuable customer and a mutual trust factor is established.
A good credit score does have its own paybacks, so work towards getting a better score and reap in the benefits!