Some people subscribe to the motto that “if you can’t pay cash for it, you shouldn’t buy it.” There’s something to be said for that attitude, as it’s rooted in a sense of financial responsibility and an aversion to getting into trouble with debt.
For others – dare we say most people – never borrowing money is unrealistic. For example, accumulating enough cash to buy a house or a car outright these days can be difficult if not impossible. In fact, in some cases, it may be better in the long run to take out loans for those things instead and put larger amounts of liquid funds toward other investments or setting up a rainy-day fund.
The point is, everyone has their own approach to managing their assets, and each can be valid, especially in conjunction with the advice of a trusted financial advisor. But one thing is certain – if you ever need to borrow money for any reason, your credit report had better be buttoned up.
Having a good credit score adds considerable value for a number of reasons and can significantly enhance various aspects of your life. Here are 10 ways a strong credit score can positively impact you and your financial picture.
1. Easier approval for loans and mortgages.
Let’s start with the obvious one. Good credit increases your chances of getting approved for loans, including mortgages, car loans, and personal loans. Lenders view you as a lower risk and someone who is likely to pay back the loan, which can expedite the approval process.
2. Potential access to lower interest rates.
It’s true: not all borrowers receive the same interest rates. With a higher credit score, you can possibly qualify for lower rates on installment loans, revolving credit card accounts, and more. This translates to lower monthly payments, less interest paid over time, and more savings for you.
3. Better rental opportunities.
Whether it’s due to timing, circumstances, or simply a personal preference, renting a home can be a better option than buying. But that does not prevent you from needing good credit. Many landlords check credit scores when evaluating rental applications. A strong credit history can make you a more attractive tenant, potentially leading to better rental options and lower security deposit requirements.
4. Higher credit limits.
With good credit, banks and credit card issuers are more likely to offer higher credit limits. This flexibility can provide greater financial security and more purchasing power when needed. But remember, you should always be careful about keeping your debt level manageable and not digging yourself too deep – especially when you consider that your debt-to-income and credit-utilization ratios have an impact on your credit score.
5. Utility service approvals.
Companies that provide gas, electric, internet, and telephone services may review your credit during the setup process. Good credit can help you avoid hefty security deposits and other roadblocks when you’re moving to a new home or activating a cell phone plan for yourself and your family.
A higher credit score gives you more control over your financial future, with the ability to handle unexpected expenses more effectively and have more options available to you as you pursue your long-term goals.
6. Possible insurance premium savings.
Many insurance companies consider credit scores when setting prices. Those with good credit often qualify for lower insurance rates on policies such as auto, homeowner’s, and renter’s insurance, potentially resulting in hundreds if not thousands of dollars saved annually.
7. More and better employment opportunities.
Some companies conduct credit checks as part of the hiring process, especially for positions involving financial responsibility. A positive credit history can enhance your employability and demonstrate your reliability to potential employers.
8. Enhanced negotiating power.
Whether you’re leasing a car, signing up for a cell phone plan, or applying for financing on a major purchase, good credit can give you leverage to negotiate better terms, discounts, or perks.
9. Improved business opportunities.
Entrepreneurs and small business owners often rely on personal credit for initial financing and business credit in the early stages of their enterprise, when cash flow can be a concern. A higher personal credit score can lead to more favorable terms on business loans and vendor agreements, facilitating business growth and eventually eliminating the need to use personal credit for business purposes.
10. Greater financial confidence.
Never underestimate the power of a “can do” attitude! Maintaining good credit can provide peace of mind and a sense of security. A higher credit score gives you more control over your financial future, with the ability to handle unexpected expenses more effectively and have more options available to you as you pursue your long-term goals.
As you can see, the benefits of good credit extend across various aspects of your personal and professional life. Whether you’re just starting out on your credit journey or you’ve been at it for a while and had some challenges along the way, CredEvolv is here to help. When you enroll with us, we’ll use our proprietary platform to connect you with a certified, nonprofit credit counselor who will be by your side as you progress toward your credit score goal.
You can feel great about the fact that everything will be handled legally, ethically, and effectively, with just the right mix of technology and personal touch. Ready to take charge of your credit journey? Explore our resources and start improving your quality of life today!