How Good Credit Can Help You In Life
Having a good credit history can do a lot in your life. A good credit score can affect your finance and help you out when the money gets tight. Before getting too much into how a good credit score can change your life, it is important to understand what is meant by credit score. Essentially the credit score is an indicator of the risk that a creditor is taking when lending money to you. Simply put, it tells your potential lender how likely you are to repay the borrowed money on time.
The credit score is a three digit number that ranges between 300 to 850. It factors in aspects like your history of keeping up with payment schedules and whether or not you have a good standing with credit unions and banks.
A good credit score tells the potential lender many important things about you. This is why it is important to keep an eye on your credit history.
Here are some of the ways a good credit score can help you.
It Is Easier to Get Approved for Higher Limits on Your Credit Card
Certain situations might create the need for a higher spending limit on your credit card. This is something which has to be approved and sanctioned by your bank. A bad credit score means you are likely to be rejected due to a lack of good standing with your bank. On the other hand, if you happen to have an excellent credit history, most banks are likely to consider giving you a higher spending limit since the apparent risks are quite low.
An added advantage of getting approved for a higher spending limit on your credit card especially if you do not use your credit card all that much is that it can help you get a better credit score. Keeping your usage below 30 percent of the credit card limit can pave the way to better credit scores.
You Can Demand the Best Interest Rates on Your Credit Cards
The interest you are charged on your credit card or whenever you borrow money can change according to your credit score. A decent credit score gives you leverage to demand the best interest rates which means you have to pay much less on your credit cards. This plays an important role in your finances since it can potentially lower the burden of heavy repayments.
In most cases, the interest takes up a huge chunk of the payment in addition to paying back the principal amount. A lower interest rate leaves you with more money for repaying borrowed money.
You Can Use Your Credit Score to Rent an Apartment
This is quite an advantage for those who are planning to rent out a home. Several landlords use the credit score as an indicator of your standing finance wise. A good credit score acts like an assurance that you are highly likely to pay your rent on time. A good credit history increases your likelihood of getting a place to stay. In some cases, a good credit score might get you a lower security deposit as well.
A bad credit history can make landlords antsy about renting out the place to you for fear of risk of losing money. An excellent score means a highly confident landlord.
You Can Get Better Rates for Auto Insurance
Auto insurance companies charge insurance premiums based on your insurance score which is linked to your credit score. A bad credit history can turn against you when you apply for auto insurance. This is because insurance companies believe that in theory, a person with bad credit score are a high risk to the insurance company and therefore charge extremely high insurance premiums in such cases. On the other hand, a person with a good credit score is considered low risk and would be considered for lower insurance rates.
You Become Eligible for Credit Cards With Better Rewards
A good credit score can actually help you apply for credit cards that offer the best rewards. This includes better payment plans, signup bonuses, cash back, and plenty of other benefits. Some credit cards have excellent signup bonuses and travel benefits which could go a long way in helping you save a good amount of money. The better your credit score, the higher are your chances at getting approved for such credit cards. You can negotiate on loan terms If you happen to have some difficulty with the current terms on your loan, it is best to negotiate these terms with your lender.
A good credit score acts in your favor and may influence your creditors to be more flexible. Approach them with a bad credit history and they probably won't even consider giving you a leeway of any sort since it increases the financial risk for them.