Your credit score is the most crucial indicator of your financial strength and to a large extent, financial freedom. It is the cumulative summary of how you’ve handled your debts, payments, income, monetary accounts and other financial dealings.
What Makes Credit Score Significant?
Your credit score does not affect just one or two aspects of your financial life. It determines what interest rate you pay, how much of a loan you are qualified to borrow, how easily you get a job, rental home, phone contract, and essentially, your general social standing.
Five Ways a Good Credit Score Makes Your Life Better
Given below are five of the most glaring benefits of a good credit score –
1. Low Interest Rates
The interest rate you pay on loans increases if your credit score is low. In addition, the interest rates on credit card or mortgage could also be lower.
2. Simpler Loan Application Process
You may qualify for bank loans with a good credit score. That alone makes the process simpler and more straightforward. A shabby credit history is likely to delay the process and may affect your chances of qualifying for certain loans. If you have an important investment upcoming, like a mortgage loan, a good credit score will allow you to qualify for premium rates. Your options are far more limited, and the rates could be much higher, if your credit score is poor.
3. Higher Limits
If your borrowing capacity has dipped significantly, the simplest way to increase it is by improving your credit score. When lenders and financial institutions see that you’re reliable, they would agree to lend you more money.
4. Favorable Negotiating Power
With the backing of good credit, you can negotiate interest rates from any lender. You can even cite the low interest offers you’ve already received based on your good credit score to third parties and pay even less interest.
5. Less Insurance Premiums
A lot of people pay heavy insurance premiums for auto, health and life insurance. Good credit helps you get competitive premium rates, especially in the case of auto loans.