The Benefits of Good Credit


By Doug Matus

Maintaining good credit can be a lot of work. High scores require that you avoid abusing credit cards, keep your debt under control, diligently pay bills on time, and regularly review your credit report for errors. Since it’s possible to make it through life with less-than-perfect credit, many people take the route of least resistance and rank credit scores fairly low on the list of priorities.

A good credit history and high credit score come with many benefits, however. From low-interest loans to lifestyle perks, good credit pays handsomely across the everyday and contributes huge dividends toward major life goals. In particular, these five benefits of good credit should inspire anyone to reevaluate the importance of their scores.

1. Better Credit Card Deals

Credit-conscious consumers understand that the best credit cards are only available to those with excellent credit. Your borrowing ability, for example, can increase dramatically once you’ve proven your ability to handle debt.

According to Nedalee Thomas, a financial expert and money coach, a person with great credit could have between $11,000 to $30,000 available on a single card. Compare this to the $500 to $1,000 limit of someone with poor credit, and the material advantages of good credit become obvious. Higher limits can also make you look better to creditors, since your ratio of available credit contributes significantly to your credit score.

When it comes to credit cards, an excellent credit history unlocks more than higher limits. The best perks, which include lower interest rates, cash-back bonuses, and rewards points, can not only save you money — they’ll also encourage you to use your card. Regular card use, when combined with on-time payments, will help lift your credit scores even higher.

“There are plenty of perks that come along with having a good credit score,” says David Bakke, finance expert at Money Crashers. “First, you’ll qualify for lower interest rates. Plus, you’ll be eligible for better cards with benefits and advantages reserved only for those with high credit scores.”

2. Easier Rentals and Leases

In a manner similar to a lender, a potential landlord will review your financial background as a measure of your trustworthiness. To accomplish this, most will pull your credit score; if the number does not appear high enough, you may lose out on the competition for your dream apartment. Even if you get approved for a lease, you can expect other drawbacks from poor credit.

“Another benefit of having great credit is the terms you can receive when renting an apartment,” says Brandon Schroth, digital analyst on behalf of Personal Loans for You. “Some landlords will charge a higher security deposit to those who have poor credit.”

Even if you’re not in the market for a new apartment, consider the benefits of good credit when you go on vacation. If you plan to go somewhere for an extended stay, good credit can allow you to negotiate fees and security deposits for your vacation rental.

If you enjoy the flexibility of vehicle leases, you should guard your credit as a precious resource. High scores give you extra buying power, and dealers will regularly offer lower financing to customers with excellent credit. You can also save money on insurance for your new ride, as insurance companies regularly run credit checks as part of the coverage process.

3. Get a Better Job

You may think that to get better credit scores, you need a better job; in reality, the opposite is often true. Though they must receive your permission, many employers will now check your credit scores as part of the application process. From the employer’s perspective, a credit score can yield valuable insights into a potential hire’s reliability and attention to detail. Credit scores can also help differentiate between equally qualified candidates for competitive positions.

Items that can raise red flags include frequent late payments and records of collection; in other words, the exact things you should avoid for the maintenance of a high credit score. Though your credit probably won’t singlehandedly disqualify you from a job, it can certainly drive employers to hesitate — and make the offer to someone else.

4. Save Money on Your Mortgage

Lenders are much more likely to provide a beneficial rate for your mortgage if you have a clean credit history and high scores. Considering the size of these loans, it’s difficult to overstate the importance of favorable terms.

“We all know that higher credit scores mean lower interest rates for savvy consumers,” says Jennifer Brazer of Complete Controller. “Even a point or two less can provide a great advantage. Think about the impact of an interest rate on a mortgage: over the life of the loan, it can result in thousands to tens of thousands of dollars in savings.”

A mortgage represents a lengthy partnership between a borrower and a lender. Because of this, lenders will often compete for the most attractive candidates, which allows those with good credit to shop around for deals. If you already have a mortgage, high credit scores can pay further dividends should you ever want to refinance.

5. The Power of Negotiation

Credit scores do not merely give you access to perks and benefits — they also give you leverage at the negotiating table. If someone with stellar credit applies for a personal loan or mortgage, they become a hot commodity on the lender market. Banks and other financial institutions want stable assets, and prefer investments with guaranteed returns. In the case of a mortgage, you become a candidate for a relationship that could last decades.

Since loans can represent serious money for lenders, they will compete for the ability to do business with the most attractive candidates. Good credit suggests reliability and financial stability, which indicate guaranteed payback for the bank. Savvy consumers leverage this power into lower interest rates, higher credit lines, and beneficial repayment plans. Never feel afraid to use your credit score as leverage; after all, you’ve had to work hard to keep those numbers high.

Written on May 27, 2017

Self Lender is a venture-backed startup that helps people build credit and savings. Comments? Questions? Send us a note at hello@selflender.com.

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