Credit Tip Tuesday #46 The Benefits of a Good Credit Score

Having a higher credit score can lead to many opportunities in life that you might not have been aware of. In our previous blog, we went over different methods on how you can improve your credit score and what you can do to maintain these scores. Today we are going over the different ways a high credit score will help you in life, and it isn't just for bragging rights.

Staying on top of your finances will often lead to high credit scores, and below are some of the benefits you can get when achieving/maintaining a high credit score.

Better Chance for Credit Card Approvals

If you have little to no credit, you'll often find yourself struggling to find a credit card provider to either lend you money or lend you the amount you are looking for. Building your credit is one way to ensure that when you apply for credit cards, you'll have no hassle in the process of approval, as well as getting approved for a limit that you want. Income and debt also play a part in this but it's always good practice to be on top of your finances from all angles.

With Plastk Secured Credit Card, we offer instant approval on our secured credit cards so you can get started and give yourself some credit. We want to make sure you are set for the future and that having little to no credit won't serve as a disadvantage to you. 

Higher Credit Limits & Lower Interest Rates

Being approved for higher credit limits is another benefit you get with having a high credit score. This is useful for if you are looking to make larger purchases and need the credit limit to do so. Having a higher credit limit also helps you keep down your credit utilization rate which results in you improving your credit score. This is a huge benefit as you not only get the ability to purchase higher value goods, but you can improve your credit score at the same time. 

Apply for credit cards and loans, you are given the ability to borrow at lower interests than if you were to have a lower credit score. This is especially useful because by having a low credit score, you would have to pay much more for any interest fees.

Showing the lenders and creditors that you have a high score will help you lock down lower rates and if you ever needed to pay for interest fees, you'll have a peace of mind knowing that the rates are significantly lower. Having lower interest rates will mean lower interest charge payments which leads to you paying off your debt much quicker.

Easier Approval for Mortgages

When looking to purchase your first home, your credit score is one of the key components to how much you can get approved for. The higher your score, the better interest rates you can get, as well as a higher amount you can be approved for. Having a lower mortgage approval amount means you would need a higher down payment upon purchase to cover the home. So while you may not think having a good credit score is useful, you will definitely need to increase it for if you want to make a purchase as big as your first home. 

Renting Homes

It's not just home purchases where you might need higher credit scores, but also for renting a home. Landlords these days are often using credit checks to screen for their tenants. This is useful as it helps them determine those who are more likely to pay the rent checks, and see if there are any red flags associated with the tenant looking to rent the property.

This is why it's important to have a high credit score, as if you are unable to secure a mortgage, you want to keep the score high enough so you can still rent a home as your backup plan. 

Car Insurance Rates

Dealerships will run credit checks for if you plan on purchasing the car on a financing/leasing term. High credit scores will help you secure a lower interest rate which results in the total amount owing on the car to be much lower at the end of the term. This also keeps your car payments lower so it's important you keep a good score to avoid paying more than you should. Depending on the value of the car, the difference in interest rates between a good and bad score could be fairly significant. 

No Security Deposits on Utilities/Cell Phone Contracts

With lower credit, some businesses may ask for a security deposit for when you sign up for their services. This is to ensure that if you are delinquent on any payments, that they are able to cover for any losses you incur them. There are typically terms associated with these security deposits i.e the amount or how long they will hold the funds for. So if you want to avoid having to pay for these fees, be sure to consistently work on your credit score.