9 Benefits of Having a Good Credit Score
Credit is the ability to borrow money or access goods and/or services with the agreed understanding that you’ll pay for them later or over time. Lenders, service providers and merchants (known as creditors) allow you to purchase their goods or borrow money based on their confidence that you’ll pay them back, along with a finance charge that applies, called interest.
Essentially, your credit score gives them an indication of how reliable you are in paying creditors back, which informs their decision to give you money or sell you items on credit. At Credit Restore, we offer the best credit repair services for those whose credit score is weak or even bad.
Once upon a time, creditors gauged your creditworthiness based on reputation, but that method was prone to error and manipulation. By taking into account your credit history (credit report) and other factors, you are given a credit score to indicate to creditors how likely you are to pay them back for the money borrowed. Three independent credit bureaus compile and summarize credit reports — Experian, Equifax and TransUnion. Creditors voluntarily report your borrowing and repayment info to those three bureaus in order to track and create credit scores.
A three-digit number is given to each person holding credit to quickly indicate how reliable they are to pay back the debt, which is known as a credit score. There are sophisticated systems used to calculate your credit score and they may differ in how they reach the final number.
But why is it so important to have a good credit score? Well, today, we’ve put together nine great benefits to having a good credit score, which should also make it clear why rebuilding credit is important is you have a weak or bad credit score.
Better Opportunity For Loan Approval and Credit Cards
Lending money is often a supremely lucrative business when it is done smartly. Borrowers with a weak or bad credit history (reflected in their credit score) avoid seeking new credit cards or loans because they have been turned down many times. And that’s because lenders know they are unlikely to ever receive their money back, much less the profit of the interest rate. Seeking out excellent credit repair services is the best way to change the circumstance of poor credit.
While having an excellent credit score does not guarantee approval, you stand a much better chance of receiving approval for loans and credit cards with a strong credit score. Lenders will, however, also look at other factors such as your income and existing debt. But, a good credit score always allows you to apply for loans or credit cards with confidence.
Receive Lower Interest Rates
Lenders are not just giving you money out of the kindness of their hearts. Lending is an extremely profitable business and that is due to interest rates. A lender agrees to give you a certain amount of money with the expectation that you pay it back in full, plus extra as a sort of fee for borrowing money.
Those people who lenders believe to be more reliable at paying back the money (through a formula used to calculate a person’s credit score by weighing five main areas) are awarded lower interest rates. If you have a good credit score, you are almost always likely to qualify for the best interest rates offered, which means paying lower finance charges on credit card balances and loans. The less money you pay in interest, the faster you are able to pay off the debt in full or to put toward other expenses or savings.
Get Approved For Higher Limits
When lenders decide on the limit of money they are willing to offer, they primarily look at two critical areas: your income and your credit score. If you have a strong credit score, banks and credit card companies are more willing to lend you more money (higher limits) because you have demonstrated that you will pay them back.
However, a bad credit score — especially combined with a low income — spells doom. The lender may still be willing to loan you money or approve you for a credit card, but at a much smaller limit to reduce their risk. This also usually means paying much higher interest rates as well.
Easier Approval For Rental Homes and Apartments
For many people, especially earlier in their lives, they do not possess enough money to purchase a home through a homebuyer’s loan. Instead, they rent a house or apartment. However, it is far more common these days for landlords renting their property or apartment complexes to check a prospective tenant’s credit score when deciding whether or not to approve the tenant.
A bad credit score — certainly if affected by a prior eviction or outstanding rent balance — will make it extremely difficult to find a place to rent. A good credit score saves you the time and hassle of searching for a landlord or property management company that is willing to approve you despite having damaged credit. We offer a free credit evaluation for those wishing to learn more about their credit score or ways in which they fix their credit score.
Along those same lines, you may face the unfortunate financial burden of paying a desposit on utilities, which can range anywhere from $100-200 and up, if you have a bad credit score. That can be a major inconvenience when you are moving. A good credit score means you stand a better chance of avoiding any deposits on your utilities when you establish utility services in your name or transfer utilities to another location.
More Negotiating Power
Acquiring loans is not always a flat-rate cost. In fact, it often involves a level of negotiation. If you possess a good credit score, you gain leverage to negotiate a lower interest rate from the lender on your loan and even on a credit card.
You can also gain more bargaining power by using the various lenders against one another. Because you have a strong credit score, multiple lenders are eager to win your business. This may force them to offer even lower interest rates in hopes you will choose them over the competition. However, with a bad credit score, lenders are not likely to budge on their loan terms and there will not be any competition to win your business.
Better Car Insurance Rates
Not only is the process of buying a car very much dependent on your credit score, but more and more common these days if for auto insurance companies to look at your credit score as well before deciding whether or not to provide you coverage or how much of a premium they will charge to afford you coverage.
Auto insurance companies frequently punish people with bad credit scores because it is used to develop your insurance risk score, so you are forced to pay more expensive premiums compared to applicants with good credit scores. With a good credit score, not only did you receive a more favorable loan and interest rate, but you save money each month on insurance costs as well.
Avoid Security Deposits On Cell Phone Contracts
Yes, even cell phone companies can use a bad credit score against you. With many shifting to a monthly payment plan to purchase a new phone and contract, they may decide to not award you a contract if your credit score is poor. Instead, you might be stuck with a pay-as-you-go plan that is more expensive in the long run or you pay extra until you have proved yourself reliable to the provider.
There are no such problems when you have a good credit score. You are deemed trustworthy and reliable from the outset and may even receive special deals and offers because they want your business. You will not pay a security deposit either in most cases.
Self Pride and Bragging Rights
Finally, we’ll end with a more psychological, self-confidence benefit of having a good credit score. Having good credit is something to be proud of because you had to work hard in order to achieve it. It is always a better feeling to brag about your credit score than to shrink away when the topic comes up.
But you also do not have to live like forever if you have bad credit. Credit repair is achievable, especially when you choose credit repair services through a proven, reliable credit repair company like Credit Restore. We provide the expertise and personalized plan to get you back on track and regain your financial health.
So, are you ready to restore your financial health? With Credit Restore on your side, you’ve gained a powerful ally in the pursuit of credit repair thanks to the collective experience, knowledge and commitment of our credit repair company. We provide the best credit repair services available and make sure you’re involved in every step of our proven process.
To begin repairing your credit and for any other credit help, please don’t hesitate to book your appointment with Credit Restore today. Our team of credit specialists would love to discuss your situation and needs in order to form an effective strategy for credit restoration.