You’ve probably heard the phase ‘you need to improve your credit score’ more times than you can count, especially if you’ve been turned down for an auto or personal loan in the past. Truth be told, having a high credit score does far more than lowering interest rates. Having excellent credit offers a variety of benefits that are too good to pass up. The thing is, having a credit score of 750 or above isn’t always easy. That’s why it’s important to know what can impact your score and how to improve it.
Different Scoring Models
All scoring models aren’t the same. Some of the well-known are FICO and Vantage. It’s not uncommon for your score to vary month to month, unique to each credit bureau . Both scoring models consider anything over 670 to be good. However, that doesn’t mean your score is bad if it’s only 650. It just depends on how many accounts you have, your payment history, and how long your accounts have been open.
Better Insurance Rates
When your credit is in good standing, you can expect to pay less for different types of insurance. Homeowners insurance companies do a credit check when you apply, so the higher your score, the lower your rates will be.
Favorable Loan Terms
In terms of loans, as mentioned above, scores above 700 means better interest rates, higher loan amounts and even approval if your child needs a student loan with a cosigner. Since cosigners are responsible for the loan, it’s important to make payments on time and try to pay off any credit you use in full. That way, it reflects positively on your report and to potential lenders.
No Prepayment Needed for Phones
If someone has poor credit, they are either denied getting a new phone for free. Usually, that means having to pay a deposit before they can have the phone. In addition, the finance rate might have been higher if they are approved with no money down.
Easier Approval for Housing
Whether you rent or own, you need to demonstrate that you can manage your money. In terms of owning, mortgage lenders will want to see that you have an established history of paying on time. The same holds true if you rent. Landlords want to see your report and verify that you pay off your debt appropriately.
Stress-free Utility Setup
Just like insurance agencies, some utility companies also want to see an established history of payments. If you have outstanding debt on your report, they must ask for a deposit or not approve you for services. That’s why keeping your debt in check is so important. It’s not only about getting loans. How you manage finances plays a huge role in your daily life as well.
Even though it shouldn’t matter what you do in your personal life, some employers also want to know that the personal they hire is financially responsible. When they do a background check, they may also check your credit. If they don’t like what they see, you could miss out on job opportunities.
Rewards and Perks
Credit card companies also rewards card holders who keep their accounts in good standing. From point systems that offer free hotel stays to being able to fly first class. It pays to be financially savvy. Each company is different, so it’s best to research which has the most to offer.
It’s probably safe to assume that money problems and outstanding debt is stressful. In fact, these are two major causes for anxiety and depression. One of easiest ways to get debt issues under control is by paying it off one at a time. Once you start to see progress, you’ll feel more inclined to do more. Even if it’s a slow process, not having unpaid bills or high interest rates hanging over your head can make you like a new person.