Money Management
Rylan Agera
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Bad credit is like a Failure certificate you get in college. No one likes to be a failure or wants to hang around one. So then why do you have a low credit score!!
You might think of your credit score only before purchasing or applying for a home loan or a car loan.
A good credit score isn’t only good for lower interest rates, with good credit, you get exclusive entry into the world of VIP perks, offers, and many more additional benefits you surely won’t receive if you have an average or a bad credit score.
The good thing about bad credit? It can be changed. Yes, it is possible!!!
You can convert your bad credit into good credit.
But why exactly do you need good credit? Below let’s learn about how good credit helps us ease our life.
8 Benefits Of Having A Good Credit Score
1. Lower Interest Rates on Loans and Credit Cards
The first reason why you should have a good credit score is that if you do, you can get lower interest rates.
Interest rates are those additional rates that you have to pay to the bank for the money you borrowed from them i.e. loans, advances, credit cards, and so on. Interest can increase your payment to the banks easily.
This will, in turn, cost you a lot if you intend on taking credit. People who have a bad credit score are charged high interest rates as their creditworthiness is bad which means they need to pay more in the form of interest.
By simply making payments regularly and maintaining a good credit score, you can ensure that you get the best interest rate possible, thus saving a lot of money. Remember, the lower the interest rate charged by the bank, the more you have for other expenses.
2. Improved Loan and Credit Card Approval Odds
Have you ever gone to a bank with a bad credit history and come out with a loan or a credit card approved? I highly doubt you have.
That’s because the first thing banks see when they scrutinize you is if you have creditworthiness. If you have bad credit, your chances of getting a loan or a credit card are next to zero.
Alternatively, if you have a great credit score, banks are extremely happy to see that you make payments on time and have no defaults whatsoever, thus approving your loan amount or approving a credit card in a jiffy.
Note: Credit score is one major factor in deciding whether to approve a loan or not. But it’s not the only factor. There are a few other factors that help the banks decide whether to approve your credit or not.
3. Enhanced Negotiating Power
A good credit score gives you leverage. It means you can negotiate a lower interest rate on a loan you wish to take. If not a lower interest rate, banks can provide you additional benefits, perks, and incentives only because you have a good credit score.
If the bank still doesn’t agree with your terms, you can always approach other banks, make them an offer, and tell them what other banks are offering you. All the banks will surely try their best to offer a better deal and make you take a loan from them.
Instead of paying more, you can let banks compete among themselves. You can sit, relax, and choose the bank that offers you the best deal. Don’t you feel powerful already?
4. Access to Larger Loans
Your borrowing capacity is solely based on your yearly income and your credit score. One of the benefits of having a good credit score is you can get approval for a larger loan limit.
Let’s assume you got a loan even though you had an average credit score, now you want to increase the loan amount because you realize you need more money, at this point most banks will deny giving you any additional money as they are uncertain if you’ll be able to make payments on time.
Having a good credit score reduces the stress banks have, makes them trust you more, and gets you approved for larger loans without hassle.
5. Unlock Premium Rewards and Offers
If you have a good score, you’re probably on the top list of the banks.
Some banks issue cards like platinum cards, which provide great offers, rewards like free movie tickets for two, 10% off on online orders using the card, cashback, and a lot more perks just to get you to buy using that card.
Having a good credit score is like icing on the cake, if the bank creates exclusive offers only for the high credit score community, guess who’s on their list of people!
Surely these are strategies to make sure you spend more than usual but if you can control your urge to spend aimlessly and maintain a good score, you’ll have a lot of benefits to enjoy yourself.
6. Simpler Apartment Rentals
Just like banks like to see your creditworthiness, homeowners willing to offer their house on rent also check your credit. They want to see if you can pay them on time if you’re honest.
They don’t want to call you on the last day of each month at 8 in the evening and ask you to pay your rent and they especially don’t want to hear you say, “I can’t pay the rent this month”. They’ll make sure they do thorough research on you and one major factor they’ll check – is your credit score.
So don’t make it hard for them as well as yourself to get an apartment.
7. Job Opportunities
Now your credit score does not affect your chances of getting a job, that solely depends on your knowledge, skills, and confidence levels. A few companies want to make sure they get the best candidate and they might check your credit score (after they ask your permission).
If you have an average or a good score, no need to worry. They won’t do anything. But if you have a bad credit score or have had bankruptcy issues in the past cause a red flag to many companies, it says a lot about you as a person.
Bad credit tells companies that you’re not a man who can manage his finances and you often fall into problems you can’t get out of. No company wants that right?
8. Elevate Your Reputation
Do you remember, in school when you got an A+ grade and everyone started treating you like a smart student? That’s how you’ll be treated if you maintain a high credit score.
Other than the actual benefits you get from having a good credit score, you get to brag about it! Isn’t that awesome?
If your credit score is really good and no one in your locality or your friend circle has such a great score, they will start respecting you. And who doesn’t want to be respected?
Even if you’re meeting a client, and if out of the blue he/she asks you about your credit score, you can proudly say it. It has a major impact on you as an individual. The best thing you can do is to make sure you have a good credit score.
Why Have A Good Credit Score?
The basic explanation with banks and other loan-providing companies is that they would more likely provide loans (small or big) to people who they feel will pay them all the money back with interest in the given period.
In short, loan-providing companies prefer giving money where there is less risk for them. If your credit score is high, it indicates you can pay the entire sum along with the interest on time.
For this, they are willing to charge lower interest rates too as their risk has reduced. On the contrary, if your credit score is bad, you will be charged for the highest interest rates as there is a higher risk of you not repaying the bank or any loan-providing financial institution.
If you’ve taken a lot of effort to take your credit score from bad to good or if you just started out or even if you’ve been using loans and credit cards for a long time and you have a good score, don’t miss and lose track.
Tips To Get A Good Credit Score
- Analyze your credit report.
- Pay off all due balances.
- Have patience and Be consistent.
Try your level best to maintain a good credit score. It takes just two or three missed payments to start getting off track.
Once you have a good credit score, enjoy all the benefits but keep in mind to not overspend and pay all due balances on time!
What importance do you think credit scores are in your life? Let me know in the comments below.
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