Why It’s So Important To Have Good Credit
While we all understand the importance of managing money wisely and making all of our payments on time, you may not realize just how many benefits you can enjoy when you have a good credit score.
Read on to discover some of the most significant advantages to having great credit, and find out how you can boost your score if it’s not currently as high as you would like.
But first, let’s find out what constitutes a good credit score, so you can see where your rating currently lies.
The Parameters For A Good Credit Score
According to the current scoring model, FICO deems a good credit score to lie between 670 and 739.
VantageScore’s rating model is slightly different, and evaluates a good score as being between 661 and 780.
Regardless of which model you go by, any score over 700 is deemed particularly good; and, in fact, in 2021 the average across the nation reached 716. This is a record high and reveals that Americans across all generations are taking their credit score very seriously.
Can My Score Be Too High?
While a high credit score is obviously a good thing – and presently, we’ll find out why – you may be wondering what the highest possible credit score is; and if your score can actually be too high.
The perfect credit score is 850, and while you may be wondering if you can achieve such a stellar rating, the truth is, it’s not crucial. As long as your score is reasonably high, you can still enjoy plenty of benefits, without having to strive for perfection. Speaking of which, here are some of the main advantages of having great credit.
You Can Save Money On Your Insurance
Whether you are in need of car insurance or home insurance, you will probably find that you pay less for your policy if you have good credit, compared to others who may have a lower score.
This is because insurers draw on both your insurance and credit history to evaluate your level of risk – so, if you can show that you have a stellar credit report, they will most likely give you cheaper rates, as you will be deemed ‘low risk’.
It Will Be Easier To Rent A Property
Credit scores are increasingly being used by landlords when they screen prospective tenants. Those with a higher credit score are more likely to be approved than those with a lower score, particularly if their bad credit is related to a previous tenancy issue, such as eviction.
You Can Enjoy Special Perks
When you have a good credit score, you will receive some benefits that others won’t – such as not having to prepay or make a security deposit when you want to purchase a cell phone. You will also find it easier to set up your utilities accounts, and you may not have to pay a security deposit for those either.
You Will Get Lower Interest Rates
Another significant advantage of having good credit is that it can make you eligible for a lower APR when you apply for a credit card. If you want to upgrade your card in the future, having a high score can help with this too.
Not only that, but you may even be able to get a card with a higher credit limit, as your history will indicate that you are a ‘low risk’ applicant with healthy financial habits.
Good Credit Will Impress Potential Employers
In some states, it’s legal for employers to gain access to their employees’ consumer credit reports, in order to help them make key decisions – such as who to hire, reassign, or promote.
The amount of information they have access to is restricted by the Fair Credit Reporting Act, and they won’t be able to see your precise credit score, but they will be able to get a good idea of whether or not you have been managing your finances wisely. This knowledge can then influence your future at that company, such as whether you are hired and, later on, promoted to a position with more responsibility.
How To Boost Your Credit Score
Now that you’ve seen all the benefits you can enjoy from having good credit, you may be keen to improve your score. Here are some simple techniques to help you achieve a higher rating.
- Make payments on time.
- Set up autopay, or payment reminders, so you never miss a payment.
- Keep tabs on your credit utilization, which you should aim to get below 30% – or, better yet, under 10%.
Using these easy tips, over time, you should find your credit score steadily rising, as long as you continue to make healthy financial decisions. By simply committing to making all of your payments in a timely manner, you should soon be able to make the most of all of the advantages mentioned above.
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