A credit score refers to the creditworthiness of an individual. As a borrower, you may have experienced banks or finance institutions checking your credit score as a part of the application process.
This check gives them an idea of whether you can pay off the loan or not. Thus, it is highly essential to maintain a good credit score.
It is generally calculated by the respective credit bureaus of a country while considering several factors like credit exposure, payment history, etc.
The credit score ranges between 300 to 900. Most lenders consider the score of 750 and above to be excellent. Therefore, it is essential to maintain a credit score close to 900.
Nowadays, most consumers rely on credit for major purchases like cars or houses. These purchases certainly get easier with credit options like loans or credit cards.
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There are several agencies like Credit Mediation debt negotiation services that help you with improving the credit score.
The higher your credit score, the more likely you will qualify for the loans. Having a good credit score certainly has some of its other advantages. Let’s get to know more in detail.
Better Car Insurance Rates
Most auto insurance companies use the information from your credit report and insurance history to understand your insurance risk score.
Thus, they often apply higher charges and penalties for people who have got a lower credit score. These companies thus also charge higher insurance premiums.
Getting a good credit score will help you pay less premium and better interest rates.
Better chance of loan and credit card approval. The credit card has become an essential thing nowadays, and most of us tend to purchase the majority of our big purchases through it.
However, banks and financial institutions only offer these credit cards to people with better credit scores. Lenders often turn down people with poor credit scores. This is applicable for loans as well.
Having a good credit score does not guarantee the approval of your loan or credit card as they consider other factors as well.
However, it certainly increases your chances of getting faster approval. Thus, you can undoubtedly apply for loans and credit cards in confidence with a good credit score.
Approved for a Higher Limit
The borrowing capacity of the borrower is based on the credit score as well as the income. A good credit score demonstrates that you have a good repayment record, and thus they can consider you for lending any financial help with a higher limit.
Most people do get approval loans in case of poor credit scores. However, the rate of interest and the overall premium amount is on the higher side.
Thus, if you wish to save on the excess charges, make sure to maintain a good credit score.
Cell Phone Contract With No Security Deposit
Besides financial institutions, cellular service providers also consider credit scores while getting into the cell phone contract with the consumer.
Having a bad credit score can result in no contact from the service provider. In these cases, people tend to pay extra charges or higher security deposits to avail the services.
People with good credit scores do not need to pay any security deposit and get eligible for a discounted purchase price on the latest plans while signing the phone contract.
Easy Approval for Apartments and Rental Houses
Nowadays, most landlords use credit scores while screening their tenants. Having a bad credit score can affect your chances of getting into the apartment, especially if it is a previous eviction or any outstanding rental balance.
Getting a good credit score will always help you to overcome the hassles of finding a landlord that can approve the tenants with a poor credit score.
Higher Negotiation Capacity
With a good credit score, a consumer can always leverage on negotiating a better interest rate on the credit card or a loan.
You can certainly take advantage of attractive interest rates and offers that you get from various financial institutions based on your credit score with your bargaining power.
Having a poor credit score will always end up lenders budging on the loan terms, and thus you will not have access to any offers or benefits.
On a concluding note, a good credit score will always give you good opportunities and ways to save a good amount of money.