What Are The Benefits Of Having A Solid Credit Score?

As an adult, you probably have a pretty good idea of just how important your credit score is to your financial stability. The reality is that other than your social security number, your credit rating or score is the second most important number in your life. What you may not realize is how your credit can have such a profound effect on so many aspects of your life.

In the sections below, the information is going to focus on how a good credit score can bring benefits to your life. It will also focus on defining a good credit score and how to keep your score in the right place.

The Benefits of a Good Credit Score

If you have big credit card balances, you have probably experienced having trouble getting additional credit whether it be for a home, car, or additional credit lines. Hence, you already have an understanding of how questionable credit can adversely impact your life.

However, a good credit score can make your life significantly better in the following four ways.

1. Getting Access to Credit

Of course, a good credit rating tells prospective lenders a story about you. It tells them you manage your finances very well. It also tells them that when you do owe money, you are responsible enough to make your payments on time.

When lenders see that kind of a story, they are more than ready to open the checkbook to start writing checks. For you, you get peace of mind knowing that when you need or want something, you’ll have little trouble finding a lender that is willing to help you.

2. Being Able to Rent a House or Apartment

When it’s time to look for a new residence, you’ll be out there asking landlords to trust that you will treat their assets with care. You’ll also be asking them to trust you to make your rent payments on time.

A good credit score indicates you will do just that. Combined with good references from prior landlords, renting a residence is infinitely easier with good credit.

3. Getting an Employment Boost

In a competitive employment market, employers want the best employees they can find. They want people who are responsible, organized, and living a life without much negativity.

Prospective employers will look at your credit score. If your credit score is solid, it tells them that you are a reasonably responsible and reliable person. Sometimes, it’s enough to tip the scales in your favor if other candidates have less than desirable credit.

4. Qualifying for Better Car Insurance Rates

It’s interesting to note why insurance companies look at your credit score. It’s not always about them trying to figure out if you can and will make your premium payments. Many times, they are looking to see if you behave responsibly in your life. A good credit score says you do behave responsibly, and some insurance companies respond by giving you discounts for responsible credit habits.

What is a Good Credit Score?

From one industry to the next, a good credit score might seem a bit subjective. The scores are real numbers but how some people and industries interpret those numbers might be different.

If you want to know what qualifies as a good credit score, you should go to the experts. Equifax is one of the three top credit rating companies in the world. According to them, credit ratings fall like this:

  • Below 580 is poor
  • 581 to 669 is fair
  • 670 to 739 is good
  • 740 to 799 is very good
  • 800 and above is excellent

For the most part, lenders will interpret your credit score based on these guidelines. Once you know where you fall, you’ll have a general idea of how lenders might feel about writing you a check. The good news is that you do have the ability to improve your credit score if you know how the credit game works.

How to Improve Your Credit Score

As you can guess, your payment history plays a big part in determining your credit score. If you make all of your payments on time, your credit score will stay solid as long as your credit utilization rating is not too high. This rating is the amount of debt you owe versus how much credit is readily available to you. If this percent gets too high, prospective lenders might get nervous about extending your more credit.

As for other ways to improve your credit score, you will want to focus on your utility and cell phone bills. A lot of people don’t realize that utility companies will send in derogatory claims for unpaid bills. As long as you pay these bills timely, it can actually help boost your overall score.

Another thing you should consider is going ahead and applying for an extra credit card or two. As long as your credit report doesn’t get hit with too many inquiries, an extra credit card might be a useful way of improving your credit score. How? The secret is to get the card and the additional available credit without actually using it. As was suggested above, that would lower your credit utilization ratio, which will give your credit a boost.

Finally, you can improve your credit score by remembering an “ounce of prevention is worth a pound of cure.” Most credit reporting agencies will offer you one free credit report a year. You should be checking your credit report at least that often. What you might find are errors that have been dragging your score down. By simply addressing the errors and getting the information corrected, you can improve your credit score immediately.

The bottom line is this. It’s incumbent on you to maintain good credit. If you do so, you will reap the benefits. If you don’t, it’s likely you will suffer a bit as far as your financial stability is concerned. If you want to know how to get assistance with your credit score, all you have to do is seek help from the experts.

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