Last month we looked at savings and financial goals, so in-keeping with the finance theme, this month, we take a look at credit and why keeping your credit score high has more benefits than you may think.
According to credit bureau Experian, there is a marked increase in credit scores for consumers across all generations in recent years. The majority of American consumers now score at least ‘good’ or higher.
Did you know that owning a good credit score can improve your life in more ways than you can imagine? High credit score rankings also mean good news for those of you wishing to buy a property. There are other significant advantages of having a good credit score too…
Here are the top five most significant advantages of a good credit score:
Access better rates on car and homeowners insurance. A good credit score can save you money on your car and homeowner insurance. Most US states allow credit-based insurance scoring. (Assessing your risk based on how well you handle your money.) Nationwide reports that credit-based scoring results in the fairest assessment of a driver’s risk. It lowers premiums for about half of its customers.
- It is cheaper to borrow money. Suppose you want an auto loan, a loan to remodel your house or open a business. In that case, a good credit score will give you access to a lower interest rate on many kinds of personal loan. If you are requesting a mortgage, you could save upwards of 1% in interest. In other words, you may save at least $200 per month over the lifetime of a 30-year mortgage on a $300,000 house.
- Be better prepared for the future. When you have a ‘good’ credit score or higher, you are much more likely to meet lending approval guidelines to borrow money when you need it most. So if you’re ever in a pressure situation and need a new credit card, you are much more likely to qualify for a 0% APR card. For example, during a life-changing transition, such as a move or home remodel, you can take advantage of the introductory offers and reward incentives given to new credit card applicants.
- A good reputation gets you noticed. ‘It never rains, but it pours’, is very apt here. When you can show you don’t need credit, the offers come to you when your credit score shows you’re a trustworthy borrower. Your score rises when you can show you are not using your entire credit card balances. In other words, when you want a personal loan, refinance or upgrade to a lower-rate card, your good reputation will give you a better chance to get you what you want.
- Good habits follow you into the workplace. In US states that allow it, employers can use consumer credit reports to decide whom to hire, promote and reassign. This is especially important if the position comes with the responsibility of making high-level financial decisions. But don’t worry; there are limits as to what your employer can view under the Fair Credit Reporting Act. However, with your signed permission, employers can legally access your credit report and see information such as any open lines of credit (such as mortgages), outstanding balances, auto or student loans, past foreclosures, late or missed payments, bankruptcies and balances that have gone to collections. While employers can’t see your actual score, remember that they will see most of the information that makes up your total score.
Ready to start building excellent credit? Download this month’s free credit-building guide for more tips and ideas.
Your credit score is your history of financial responsibility. Maintaining excellent credit comes with several perks, including a few that may astound you!
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