5 benefits of having a good credit score

At its core, your credit score is an indicator of how likely you are to pay your bills. As a result, those with a high credit score often end up having an easier time getting approved for new financial products and they also receive the best interest rates. Generally, any FICO score above 670 is considered a good score.

If after checking you still need more inspiration to convince you to build your credit, read on below.

What can I do with a good credit score? 5 benefits

Here are five reasons why it's worth getting your score as high as possible.

1. Secure a loan with a low interest rate
2. Qualify for a refinance
3. Lower insurance premiums
4. Easier time renting a home
5. Credit card rewards

1. Secure a loan with a low interest rate

Truthfully, thanks to the coronavirus pandemic, today's rates are at record lows. However, if you want to qualify for the lowest of low interest rates, you'll have to have an excellent credit score.

Here are some loan types that require good credit.

• Mortgages: If you're thinking of buying a home, you're going to need to get a mortgage and your credit history will play a large role in determining what interest rate you're given on the loan. In order to find the lowest rate possible, your best bet is to shop around. Visit Credible to compare rates and mortgage lenders.

• Personal loans: Personal loans can be a great tool for consolidating debt and lowering your credit utilization rate. If you think a personal loan might be the right choice for you, visit Credible to get a sense of your personal loan options.

• Student loans: If you've been out of school for a while, it's possible to take advantage of today's low interest rates by refinancing your student loans. You can get personalized rates from multiple private student loan lenders from Credible without harming your credit score.

• Credit card: if your goal is to apply for a new card, it's best to apply for one that is in your score range. With that in mind, use Credible to find the right credit card for you

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2. Qualify for a refinance

If you already have an existing loan, but still want to take advantage of the latest rates, you might think about refinancing. Refinancing involves taking out a new loan with better terms and using it to pay off your old loan. Typically, when people talk about refinancing, they're either referencing their mortgage or their student loans.

Mortgage refinancing

At the time of reporting, home loans with fixed interest rates are as low as 2.71% for a 30-year loan, or 2.26% for a 15-year loan, according to Freddie Mac. Meanwhile, loans with variable interest rates are at an average of 3.16% for a 5/1-year ARM.

Student loan refinancing

HOW TO GET THE LOWEST STUDENT LOAN REFINANCE RATE

3. Lower insurance premiums

In addition, having a higher credit score can mean that you pay less for auto and home insurance. In fact, according to a study by InsuranceQuotes.com, drivers with poor credit scores pay up to 91% more for their auto insurance than those with excellent credit scores. A similar study found that having a fair credit score can add up to 29% to your home insurance premium.

THIS IS THE BEST WAY TO LOWER YOUR CAR INSURANCE COSTS

4. Easier time renting a home

Often, before a landlord will allow you to sign a lease, they will check your credit report. Since your credit score is an indicator of how likely you are to pay your bills, those with excellent credit are more likely to have their rental applications accepted.

Landlords are required to pay their mortgage whether you pay rent. With that in mind, many landlords weigh a prospective tenant’s credit score heavily because they don't want to worry about having to come up with the funds for the mortgage payment on the fly if a tenant doesn't pay.

Use a credit monitoring service to determine if your credit is strong enough to qualify to rent a home.

5. Credit card rewards

Lastly, people with high credit scores tend to have an easier time taking advantage of credit card rewards. Put simply, if you don't need to have a card with a 0% APR period, you’ll likely qualify for other reward options like cashback or redeemable travel miles.

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