You work hard at maintaining your credit score. You make your payments on time, you don’t borrow more than you can afford and you make sure to clean up any errors on your report. You might as well get rewarded by all your hard work right? But just what can having great credit do for you? Here are 5 such benefits of having a stain-free credit report.
The Best Credit Cards
When you have good credit you will be offered the best credit cards. That means you can get a credit card with a low interest rate, no annual fees and a great rewards program. If you have a lower interest rate you’ll save big money on interest charges when you carry a balance on your card. This could translate into thousands of dollars in savings over the life of the card. Couple that with no annual fees and a rewards program and you could have a credit card that actually makes you money instead of the other way around.
High Credit Limit
Your credit card company will give you a high credit limit if you have a good credit score. You have shown that you are responsible with credit so they will let you borrow more of it. This doesn’t mean you should do it though. The credit card companies just want you to get into trouble so you’ll start paying more interest. But there’s another advantage of having a high credit limit. Part of what determines your credit score is your credit utilization rate. In other words, if you have a $10,000 credit limit and you only carry a balance of $1,000 that’s 10% which is very good. If you only had a credit limit of $2,000 and carried the same balance, that would be a not so good 50% credit utilization rate.
When you have a great credit score you’ll command the lowest interest rates. If you have your eyes on a property for sale, which is your largest purchase ever, getting the lowest possible interest rate is imperative. Just a one percentage point difference in your rate could translate into tens of thousands of dollars saved. If rates drop during the course of your 30 year mortgage you can refinance, but again would only qualify for the lowest rates if you have an awesome credit score. You will also get a good rate on other loans such as auto loans and personal loans.
If you have a stellar credit report you could stand to benefit in several other ways you might not have been aware of. Those with a good credit score can get lower rates on their auto insurance premiums. Their own internal studies have shown that those with good credit get into less at-fault accidents than those with bad credit.
If you’re on the lookout for a new apartment and have less than stellar credit, don’t be surprised if you’re turned down due to having bad credit. Landlords are turning to your credit report to see whether you’d be a good tenant. If you can’t pay your bills what makes them think you’ll be able to pay your rent, right?