Why Your Credit Score is Important
You may not notice it, but your financial life largely depends on your credit score; a significant part of anyone’s financial life. It plays a prominent role in most of your financial situations and these days; it is a major point of consideration in many financial situations. A good credit score is not only going to save you money, but it is also going to make your life a lot easier in several ways. This article has compiled some top reasons you should improve and maintain good credit scores.
So just how important is a good credit score?First off, it is good that you know your credit score. Many credit card providers are doing free credit scores for their clients. Visit them and know your score for free. Here are the benefits of a good credit:
With a good credit score, you get quick loan approvals.
While there are other factors that lenders consider before approving loan applications, an excellent credit score gives you a good chance of having your request approved while a shaky credit score is very likely to slow down your loan application process.
Again, a good credit score increases your borrowing capacity. Lenders can allow you higher finance limits because your score demonstrates that you can be trusted to pay back in time. Also, the interest rates you will pay on a loan reduce with a good a credit score.
In case your borrowing capacity has drastically gone down, the easiest way to improve it is by improving your credit score.
You get better insurance rates.
No matter what kind of insurance you want to get, your credit score is going to be a critical factor in determining the premiums you will pay. Good credit will help you get very competitive premium rates. A poor credit will cost you more finances every month for coverage. This is often because many insurance firms consider risks very carefully and they argue that individuals with poor credit histories are most likely to file for more claims. So they penalize them with higher insurance premiums.
It is important to note that in the event that your credit drops after snagging a pretty deal on, say, a car insurance, your insurance firm may choose to raise your premiums or even worse, cancel your policy. Thus, it is necessary that you maintain good credit habit.
It increases your bargaining power.
Good credit scores offer leverage to negotiate for, among other benefits, lower interest rates on, say, credit cards or loans. With poor scores, you would not have much of a choice because no lenders can budge on their loan terms. With a stellar credit history, you have a chance at choosing terms that are most advantageous to you and that suit your present financial circumstances.
If for instance, you are planning to lease a car instead of buying, a solid credit history will give you some bargaining power. You might get lower-than-average financing rates because the dealer is sure you will pay back your debt on time.
You get the best credit card deals.
You have probably seen advertisements on credit cards with awesome rewards, great perks, low introductory rates and cash backs, right? To have those, you need a clean credit history. Being able to access better credit cards means you stand a chance at getting larger credit limits. You have the flexibility and the freedom to buy anything you want.
While it is always nice to earn the bonuses that come with such credit cards, it is important that you avoid overspending and carrying balances on them. Always remember to keep up the smart credit habits that in the first place gave you the good credit scores.
Effortless approvals for rental apartments.
These days, it is common practice for landlords to use your credit scores to decide whether or not they will rent their apartments to you. They often become nervous if they notice you a bad debt history, payment delinquency or when you don’t have credit history altogether. You are likely to be allowed to rent more quickly if you have an excellent credit history. While you still may be allowed to rent with a not-so-good credit, it is likely that you will pay a higher security deposit.
A good credit score will save you the agony of having to find a landlord that will overlook a poor credit. Again, it means that you can rent an apartment of your choice because the landlords will readily accept you as a tenant.
Bad credit scores may cost you a job.
It is somewhat controversial, but employers are increasingly checking the credit scores of prospective employees. Employers argue that they can determine the responsibility levels of a potential new employee by using their credit scores. This is frequently happening for jobs that require dealing with sensitive financial information or those that involve handling money.
Late or entirely missing payments, current massive debts, and bankruptcies are some of the red flags that apparently show that you are untrustworthy or financially irresponsible. Employers also reason that your financial problems may prevent you from meeting some job demands. Thus, a good credit would show that you are financially responsible, dependable, and trustworthy and therefore, the chances of you getting the job increase.
While, in all honesty, there are circumstances when a poor credit could be as a result of something completely entirely out of one’s control, it is important to understand the fact the employers are increasingly using credit scores so that you can start working on your credit rating.
You get cheaper utility services.
Before taking you on as their client, most utility companies go through your credit history report. If you have a poor debt and payment history, you will often be required to pay a deposit of up to £150 for your services. Given that most people also pay service connection charges you may end up paying several hundreds of dollars just to get your water back. Good credit will show the utility company that you are a reliable customer, and the deposit fee may be waived.
So there you go. Hopefully, you have realized just how important your credit score is. Maintain a good credit to keep enjoying the benefits that come with it.