Having a good credit score can get you a lot of great things. Your credit score is one of the most important factors lenders landlords, insurance companies and others use to evaluate your creditworthiness. A higher score indicates you are more trustworthy and reliable when it comes to borrowing and repaying debts.
A good credit score typically falls between 670-739 on the FICO scale and 661-780 on the VantageScore scale If your score is in this range or higher, you can qualify for the best rates and terms from creditors
Here are 10 major benefits you can get with a good credit score:
1. Easier apartment rental applications
Most landlords check potential tenants’ credit scores to evaluate their risk level. They often set a minimum score requirement, usually around 620 or higher. With a good credit score of 700+, your rental application is more likely to be approved without needing a cosigner or large security deposit.
2. Lower insurance premiums
In most states, car and home insurance companies use credit-based insurance scores to set premiums. Good credit can help lower your rates, while bad credit leads to higher premiums. Getting a free quote is the best way to see potential savings.
3. Lower interest rates on loans
Good credit lets you qualify for the lowest interest rates from lenders, saving you money. With a mortgage, a higher score could save over 1% in interest and $200+ per month. The savings are huge over the loan’s lifetime.
4. Higher credit limits and loan amounts
Creditors will extend more credit if your score proves you can handle it responsibly. With higher limits and loan amounts, you can buy a more expensive house or car.
5. Better credit card rewards
A good score lets you qualify for the most rewarding credit cards with valuable signup bonuses, points, miles, and perks like airport lounge access. Bad credit limits your options.
6. More opportunities to refinance debt
You’ll have an easier time refinancing high-interest debt into a lower rate if you have good credit. Lenders actively market refinancing offers to those with good scores.
7. Improved financial emergencies preparedness
Good credit helps ensure you can get approved for credit as needed, whether that’s a credit card with an intro 0% APR to finance a crisis expense or a personal loan. Bad credit limits options.
8. Perks and exclusives
Higher-end rewards cards reserved for good credit offer luxury perks like airline elite status, hotel elite status, concert presale ticket access, and more. Bad credit excludes you from these.
9. Better chances for employment
Many employers check credit reports to evaluate applicants’ financial responsibility. Good credit can work in your favor, while bad credit may hurt your chances.
10. More offers from lenders
A good score flags you as a low-risk borrower. You’ll receive more offers for credit cards and loans tailored to your good profile. Offers are limited with bad credit.
As you can see, good credit can make nearly every aspect of your financial life easier and more affordable. The most important habit for building strong credit is making on-time payments each month. With time and smart money management, you can reach a score to qualify for all these advantages. Monitor your credit report regularly and take steps to improve it. A good score takes effort but pays dividends.
How to Improve Your Credit Scores
To improve your credit, focus on the underlying factors that affect your scores. At a high level, the basic steps you need to take are fairly straightforward:
- Make at least your minimum payment on time. Even a single payment thats 30 days past due can hurt your credit scores, and the late payment will stay on your credit report for up to seven years. If you think you may miss a payment, reach out to your creditors as quickly as possible to see if they can work with you and help you stay in good standing.
- Keep your credit card balances low. Your credit utilization rate is an important scoring factor that compares the balances and credit limits of revolving accounts, such as credit cards, from your credit report. A low credit utilization rate can help your credit scores, and people with excellent credit scores tend to have an overall utilization rate in the single digits.
- Open accounts that will be reported to the credit bureaus. Having several open and active credit accounts can thicken your credit file and make qualifying for credit easier. A mix of open installment and revolving accounts can also improve your scores.
- Only apply for credit when you need it. Applying for a new account can lead to a hard inquiry, which may hurt your credit scores a little. The impact is often minimal, but applying for many different types of loans or credit cards during a short period could lead to a larger score drop.
- Review your credit reports regularly. Look over each of your three credit reports for inaccuracies or fraudulent accounts that might be hurting your credit scores; for example, an account thats incorrectly reported as past due or a credit card with a high balance that you didnt open. You have the right to dispute errors and have the creditor or credit bureau investigate.
Other factors can also impact your scores. For example, increasing the average age of your accounts could help your scores. However, thats often a matter of waiting for existing credit accounts to age rather than taking action.
Checking your credit scores might also give you insight into what you can do to improve them. For example, when you check your FICO® Score 8 from Experian for free, you can get an overview of how lenders see you based on your credit:
Youll also get an overview of your score profile, with an explanation of whats helping and hurting your score the most.
FICO’s Different Credit Scores
In 1989, FICO became the first company to create credit scoring models based on consumer credit reports. Although recent FICO® Score versions share a common name, such as FICO® Score 8, FICO creates different versions of the models for each credit bureau.
There are three general types of consumer FICO® Scores:
- Base FICO® Scores: These scores are created for any type of lender and they range from 300 to 850. The scores try to predict the likelihood that a consumer will fall behind on any type of credit obligation.
- Industry-specific FICO® Scores: FICO creates auto scores and bankcard scores specifically for auto lenders and card issuers. Industry scores aim to predict the likelihood that a consumer will fall behind on the specific type of account, and the scores range from 250 to 900.
- FICO® Scores that use alternative data: FICO has models that can incorporate alternative credit data, such as the UltraFICO® and FICO XD scores. Both scores range from 300 to 850. The former can consider linking deposit account information, and the latter can score people using nontraditional types of payment history from other databases, such as your telecom or utility payments.
FICO industry-specific scores are built on top of a base FICO® Score, and FICO periodically releases new suites of scores. For example, the FICO® Score 10 Suite includes a base FICO® Score 10, a FICO® Score 10 T (which considers trended data) and industry-specific scores.
TOP 5 Benefits Of A High Credit Score (Most People Don’t Know About!)
FAQ
What are the benefits of having a good credit score?
- Lower Interest Rates on Loans and Credit Cards : A good credit score is like a golden ticket to lower interest rates.
- Easier Approval for Rentals and Loans
- Higher Credit Limits
- Easier Approval for Higher-End Credit Cards
- Negotiating Power
- Avoid Security Deposits on Utilities
What will a 750 credit score get you?
The benefits of a 750 credit score
1 Joining this tier could potentially offer several benefits, including but not limited to: Access to lower interest rates and more favorable loan terms. A better chance of getting approved for credit cards of your choice, including those that come with perks and rewards.
What does an excellent credit score get me?
Although there’s no single number that guarantees a borrower access to new credit, excellent credit scores will generally give you an advantage when applying for new accounts. You also may qualify for higher credit limits on revolving credit accounts, such as credit cards and personal lines of credit.
What does a 900 credit score give you?
Credit scores are calculated using information in your credit report. Credit scores from 660 to 900 are generally considered good, very good, or excellent.
What makes a good credit range?
A good credit range depends on where a score comes from and who’s judging it. And there are different scoring companies, so you can have more than one credit score. As the Consumer Financial Protection Bureau (CFPB) puts it, “Based on your credit reports, you will be given a credit score by the credit-reporting companies.
What are the benefits of a good credit score?
The benefits of a good credit score are listed below. Improved access to credit cards and loans: A good credit score grants access to credit cards and loans with more advantageous terms and conditions, including lower interest rates, resulting in substantial savings on borrowing expenses.
What is a good credit score?
You don’t just have one credit score—each company does their own.” FICO®, which is one credit-scoring company, says scores between 670 and 739 qualify as good. For VantageScore®, another credit-scoring company, scores between 661 and 780 might be considered good. Scores can also be considered very good, excellent and exceptional.
What is a good FICO score?
The base FICO Scores range from 300 to 850, and the good credit score range is 670 to 739. FICO creates different types of consumer credit scores. There are “base” FICO Scores that the company makes for lenders in multiple industries to use, as well as industry-specific credit scores for credit card issuers and auto lenders.
How does a good credit score affect your life?
A good credit score will positively impact many areas of your life. Lenders and credit card issuers use credit scores to assess your credit risk and determine your eligibility for credit — whether it makes sense to lend to you or extend credit. Your credit score will also be used to decide interest rates and loan terms.
Can a good credit score help you get a mortgage?
Good credit may also help you get a mortgage for a house and a lower interest rate. The CFPB says, “The better your credit history, the more likely you are to receive a good interest rate on your mortgage loan.” 6. Get utility services more easily