The average credit score in the United States is 711, which is a good score. Credit scores are determined by payment history, amount of money owed, the extent of credit history, and mix of credit.
While it’s not the end of the world if you have bad credit, having good credit will make your life easier and allow you to save money. Keep reading to learn about the 5 benefits of a good credit score!
1. Qualify for Low-Interest Rates
One of the best things about having a good credit score is that it qualifies you for lower interest rates. Whether you are looking for a new credit card or a new loan, low-interest rates will allow you to save money.
Interest rates are how much money a lender charges you to borrow money. Having a lower interest rate will let more of your money go towards paying the principal balance of the loan or credit card.
2. Better Credit Cards
In addition to qualifying for lower interest rates, a good credit score also gives you access to better credit cards. When you have bad credit, you will only qualify for credit-building credit cards. These cards have high-interest rates and low limits.
With good credit, you will get better interest rates, rewards, and higher credit limits. Some rewards that credit card companies offer include cashback, travel rewards, gas rewards, and points.
If you want to qualify for a better credit card but you don’t have a good credit score, don’t worry. You can follow these steps to begin improving your credit score today.
3. Rent Nice Houses and Apartments
Did you know that having a good credit score will allow you to rent better houses and apartments? When you apply to live at a new place, the landlord will run your credit score.
Landlords prefer to rent to tenants that have a good history of paying their rent on time. If you have a good credit score, you are more likely to get approved to rent your dream home.
4. Save Money on Your Car Insurance
Having a bad credit score won’t disqualify you from getting insurance, but you will have to pay more money. Car insurance companies can penalize those with lower credit scores because they appear riskier.
In addition to credit score, other factors also impact your insurance premium, such as your car, where you live, and your driving record.
5. Waived Security Deposits
Have you ever set up utilities and got charged a deposit? Another benefit of having a good credit score is that you can avoid security deposits.
Security deposits can apply to utilities, new cell phone plans, and renting an apartment. While you can still qualify for these things without good credit, it will cost you more money.
Do You Want the Benefits of a Good Credit Score?
Having a good credit score will make living cheaper and easier. Some of the benefits of a good credit score are lower interest rates, better credit cards, better housing, lower car insurance premiums, and waived security deposits.
Did you enjoy reading this article on the benefits of a good credit score? If so, check out our other articles in the finance category!