Benefits of a Good Credit Score
By Domi Garcia
Credit scores can often be confusing and difficult to navigate, but that’s not a reason to ignore them. There are serious benefits to understanding your credit score. A good credit score can help you reap benefits in nearly every aspect of your life, sometimes in the places you least expect. Here are just a few benefits of a good credit report that you should make sure to know about.
Better Interest Rates
The interest rate is effectively the cost of money that you have to pay when you borrow from someone else. Typically, the interest rate you must pay correlates directly with how good your credit score is. A high credit score signals to the lender that you are a responsible borrower, and thus, you are rewarded with a lower interest rate. The money you save on your interest rate can be used to pay back more of your balance, or it can go towards other parts of your budget. A good credit score can help with car loans, credit cards, mortgages, or other loans, which makes a big difference in your overall finances.
Negotiating Power
“My mama told me, you better shop around.” These words of wisdom don’t just apply to dating but are actually valuable advice for getting a loan or credit card as well. A good credit score gives you the power to shop around for a lower interest rate or a higher credit limit. People with good credit scores can also qualify for rewards with their credit cards, which can offer extra spending money or even bonuses that go towards additional purchases. On the other hand, a low credit score means creditors typically will be more stringent with their loans terms and you won’t have as many options.
Refinancing
When your credit score increases, you may have the option to refinance some of your loans, which can save you thousands of dollars in interest. Even though creditors may not advertise this option, it’s a valuable tool for borrowers to look into and it’s a great way to use your high credit score to your advantage.
Trust
At their most basic level, credit scores represent how much someone can trust you economically. Just as relationships with friends and family strengthen with trust, benefits abound when those you interact with economically trust you. People with high credit scores find it easier to rent homes or apartments, get lower car insurance rates, get a contract for their cell phones, and avoid security deposits on utilities. These little savings add up over time to make your finances healthier, and it all comes from the trust reflected in your credit report.
Bragging Rights
A good credit score puts you in an elite group of people. Like being a member of a country club, being a member of the responsible borrowers’ club brings benefits galore, and it’s something to celebrate. Put your good credit score to work for you, and your budget can see definite rewards.
Whatever your credit score, Federated Bank can help you determine the best loan options. We have a range of flexible lending options, including specialty mortgages, some of which feature a relaxed credit requirement. When you need a mortgage or other type of loan, our experienced lenders will work with you to find the right loan for you.
