What are the benefits of having a good credit score?

Having a good credit score can significantly improve your quality of life. By proving you are financially responsible, more doors will open to valuable opportunities, superior products, and VIP perks. From improved loan product options to increased job prospects, maintaining a good credit unlock benefits that you would’ve never thought of.

What is a credit score? 

A credit is a three-digit number that measures your creditworthiness. It is calculated using one’s credit report, which includes the length of credit history, number of open accounts, types of loans, the total amount of debt, and repayment history. In other words, your credit score measures how responsibly you’ve managed financial obligations over the years. For instance, missing a payment due date can cause your credit score to drop. Those with higher scores are seen as less of a risk to banks, lenders, and creditors and thus, more attractive when forming a financial relationship. Therefore, striving for a higher credit score is extremely important. 

Here is a list of credit score ranges: 

• 300-579: Poor
• 580-669: Fair
• 670-739: Good
• 740-799: Very good
• 800-850: Excellent

What are the benefits of having good credit? 

1. Renting Apartments

An important area where your credit score plays a role is when you are looking for an apartment to rent or a home to buy. When reviewing your rental application, landlords or rental companies will look for signs that you are a financially responsible individual who can pay the rent in full on a timely basis. With a good credit score, you can drastically increase your approval odds because you are considered low-risk. Not only that, but a strong credit score can also protect you from needing a cosigner or paying a large security deposit when applying. 

2. Home Buying and Loan Products 

If you need to take out a loan for a mortgage, car purchase, a new business, home remodel, or student loan, having a good credit score is extremely beneficial. Similar to landlords and rental companies, lenders want to ensure that you can make the monthly installment payments on time. Not only will a high credit score increase your chance of receiving a loan, but also of qualifying for lower interest rates and fees. You could end up saving thousands of dollars in interest and fees over the term of a loan. 

3. Insurance Rates

Most homeowners and auto insurance companies consider your credit history when setting rates to pay for their service. While companies cannot turn you down based on your credit history, your credit score can dictate the type of rates you receive. Having a strong credit score is an indication that you’re less likely to miss payments and file financial claims. This puts in you in a position to receive more affordable premiums. 

4. Security Deposits

A security deposit is often required by landlords, cellular providers, and utility companies as a form of insurance against unpredictable events. For instance, security deposits for utilities are meant to ensure against unpaid or underpaid bills. By maintaining a good credit score, you’ve proven that you are capable of paying bills on time and thus may qualify to put forth a smaller security deposit. 

5. Credit Cards and Rewards 

Access to the best rewards credit cards out there often requires at least a good or excellent credit score. This means you can take advantage of the best introductory offers, interest rates, cash-back and rewards programs, exclusive events, and free access to online streaming services. Furthermore, you are also more likely to get approved for higher credit limits because banks are confident that you will repay their debts. With a higher credit limit, you have more freedom to finance large purchases such as emergency expenses as well as the opportunity to further increase your credit. 

6. Job Search 

Applying and landing a job is hard enough. In addition to requesting resumes, recommendations, and interviews, employers will often request access to your credit report to evaluate the risks of hiring you. A history of negative public records or derogatory marks such as late payments or bankruptcy alert employers that an applicant has a record of untrustworthy or irresponsible behavior. For jobs that require a high level of responsibility, such as government or medical jobs, or jobs that require access to company funds, bad credit history can be alarming. Therefore, maintaining a strong credit history will maximize your hiring prospects.