A lot of people out there wonder what’s so great about having good credit. For starters, there are fantastic perks to maintaining a healthy credit score — some of which could make your life simpler and less expensive. Here are three benefits of healthy credit scores, as well as some motivation and tips on where to start if you want to start working toward credit score nirvana in the future.
Benefit #1: Potentially Better Terms, Lower Interest Rates
Having healthy credit indicates to potential lenders that doing business with you is less risky. After all, your good credit shows that you have a track record of being trustworthy and making regular payments when you borrow money. Healthy credit scores might also encourage lenders to offer you lower interest rates on some loans, though nothing is guaranteed.
Benefit #2: Potentially Easier Qualification for Financing
A healthy credit score often allows borrowers more choices when it comes to financing. Yes, it takes more than simply having good credit to qualify for a new loan or credit card, but lenders typically consider factors such as your income, debt, and employment history, in addition to your credit reports and score. Good credit could help improve your odds.
Healthy credit can also give you confidence — and could potentially remove a great deal of stress from your life, since you know that you are unlikely to be turned down for financing because of credit problems or a low score.
Benefit #3: Better Insurance Premiums
Did you know that your credit might affect your auto and insurance premiums? Insurance companies routinely consult something that’s called your credit-based insurance scores when reviewing applications for coverage and pricing the cost of new policies.
Credit-based insurance scores are not the same as the FICO credit scores a lender might consult when you apply for financing. However, they are based upon the same underlying information from your credit reports. If your credit-based insurance score is high as a result of a stellar credit history, you could end up with a better deal on insurance coverage every month.
Where to Start
Are you missing out on some of the benefits above because of credit problems or a lower credit score? It’s possible that you can change that. Attaining a healthy credit score takes hard work and consistency, but it is certainly an achievable goal.
- Keep a close eye on your credit reports
- Avoid late payments
- Pay down your credit card debt.
Following these best practices can be a great place to begin your journey toward healthier credit.