A credit score is something few people spend much time thinking about until it is time to apply for a loan or credit card, but being aware of it is an important part of your financial wellbeing. It is a good idea to consider the many benefits of having a good credit score and take some time to think about how you can improve yours.
1. Credit Card Use
If you have a high credit score, you will qualify for credit cards that have a much lower interest rate. This means that you will not have to spend as much paying off your future debts, which can save you a lot of money. Your credit score is one of the main factors taken into consideration when a lender decides whether you can take out a new credit card or not. Getting turned down can be discouraging, but bydoing a free credit score check now and then and building it up as needed, you can greatly increase your chances of success in the future.
2. Renting or Buying a Home
If you are trying to get approved for a mortgage only to get rejected based on your credit score, it can be extremely frustrating. Not only do you need to get approved to be able to buy a home, but you also want to get a mortgage that has a reasonable interest rate. A good credit score helps you do this.
If you are a renter, you know that landlords take some time to screen you before letting you sign a lease. Credit scores often factor into this. A high score can get you into your next rental property faster and may even save you money on security deposit costs.
3. Insurance Rates
A lesser-known benefit of having a good credit score is that it can lead to lower insurance premiums. As is common in other industries, insurance companies often use credit scores when deciding what kind of plan you qualify for and whether or not they should raise your premiums once you are a customer. This is common with car insurance companies, but may also be a factor at play with home insurance and other kinds of coverage.
4. Other Benefits
While they may be less common than the ones discussed above, there are many more benefits to increasing your credit score. At the end of the day, a good credit score speaks of your ability to be responsible with your money. This is something that almost anyone you have a professional relationship with might take into consideration, including potential employers, business partners, and more. Having a good credit score is something to be proud of, and it can make all of your future financial endeavors easier and more affordable.
Increasing Your Credit Score
If you currently have no credit score, or if your score is low, it is a good idea to start working on building it back up. The root of a good credit score is good day-to-day financial habits. Pay off your credit card on time every month, and work to reduce any existing debts including loans and credit card debt. Doing these things not only helps increase your credit score, but it helps you to get into a more stable financial situation as well.
A good credit score brings a lot of financial benefits with it. No matter what your current financial goals are, it is likely that a high score will help you achieve them. Even if your score is not currently where you want it to be, there are ways that you can work to build it up.