There are many benefits to having a good credit score. This includes making it easier to do everything from getting a cell phone to applying for personal loans. A credit score is a three-digit number used to reflect one’s credit history. This number is determined by an individual’s length of credit history, type of debt, the total amount of debt, how they repay debt, and new lines of credit. Low credit scores can be around 300, while an excellent score is 800 or higher.
Credit Card and Loan Approval
While lending services and banks consider a loan applicant’s income and debt before approval, a good credit score increases one’s chance of getting a loan. There’s no guarantee that a high credit score ensures loan approval, but it certainly helps. It also gives one the power to negotiate the terms of the loan. According to Lantern by SoFi, “Annual percentage rates (APR) for personal loans are largely determined by your credit score.”
Get Bigger Loans
A good credit score shows everyone that the individual pays back their debt promptly. Because of this, banks are more willing to approve larger amounts when it comes to personal loans. While the goal isn’t to go way into debt, it is undoubtedly an excellent perk when one needs a larger loan for construction projects, unexpected emergencies, or to purchase a home or car.
Easier Rental Approval
A good credit score comes in handy for much more than just borrowing money. It can work to one’s advantage when renting a house or apartment. The applicant’s credit score is part of the tenant screening process. A bad credit score can ruin one’s chance of rental approval, mainly if the poor credit score results from outstanding rental balances or a previous eviction.
The Best Car Insurance Rates
Even insurance companies use credit scores. They use this number to create what is called an insurance risk score. While one can still get the insurance coverage they need with a low credit score, a high score can save them money. Those with low credit scores often pay higher insurance premiums. This is extra money that they could use to cover other expenses.
Avoid Security Deposits
A high credit score can result in one avoiding security deposits for everything from their cell phone to their utilities. When applying for cell phone service, one could end up paying extra on their contract when they have a low credit score. They might have to go with a pay-as-you-go plan. That same low credit score can make moving more expensive. Utility companies can request a security deposit when dealing with a low credit score customer.
Don’t underestimate the power of a good credit score. Working towards getting this number as high as possible will make them eligible to avail of benefits and the right to be proud of their financial efforts.
Also, look for reputed banks that can offer you maximum benefits with your loans. Do your research carefully before putting your faith in any financial institute.