Your credit report is like your transcript for your borrowing history, and your credit score is like your GPA. While your high school grade point average is long behind you, your credit score is still a very important number in your life. Why? Many people know that your credit score helps banks and other lenders decide if you are approved for loans and what you will pay. But your credit score is used for a lot more than just that! Read on to learn about other big benefits of an excellent credit score.
Get approved on (almost) every application
If you have a credit score below 700, the odds are high you will be turned down for loans and credit cards reserved for the highest credit applicants. For example, the Chase Sapphire Reserve credit card, which offers thousands of dollars in benefits each year, is reserved for those with the very best credit scores.
Even more standard loans like a mortgage or auto loan are harder to get with a poor credit history. When you walk into the local bank or credit union to apply for any type of lending product, you may have a nervous feeling in the pit of your stomach that you won’t be approved. With an excellent credit score, that worry quickly fades away.
2. Get the best interest rates
Just because you can get approved for a loan does not make it a good deal. In fact, as your credit score goes down, your interest rates go up. This is why lenders targeting the lowest credit borrowers are so bad. Payday lenders, auto title lenders, and rent-to-own businesses use predatory rates to make up for potential losses from low credit borrowers.
When you have an excellent credit score, you don’t have to worry about those unfair lending practices quite so much. Instead, banks and other lenders court you as a potential customer with low rates and other benefits.
3. Get higher credit limits
When you are already under a pile of debt you appear to be struggling to pay off, banks are unlikely to rush to give you more to spend. But when you have excellent credit, banks are happy to give you more and more credit.
My credit score is over 800, and almost every time I have asked for a higher credit limit on a credit card, it has been approved. In fact, some credit card issuers have offered me a higher credit limit without my asking on occasion. Because credit utilization is a factor used to calculate a credit score, these higher limits have only helped lift my credit higher!
4. Get any apartment or rental
When you rent a house or apartment, you are essentially borrowing the place for a monthly fee. Because credit scores are designed to show how risky a borrower is to lenders, landlords also regularly tap into the massive credit database when deciding who gets the keys to a vacant unit.