Achieving and maintaining a good credit score will help you fund the major purchases that you’ve been dreaming about — and save money over time.
Here are just some of the doors that having a positive credit history will open for you.
1. More Confidence in Obtaining a Loan
Granted, financial institutions take more than just your credit score into account when you apply for a loan. For instance, they consider your debts and income.
But a good credit score will increase the likelihood that you’ll get approved for the loan you need, according to The Balance’s Latoya Irby.
2. Lower Interest Rates on Loans
CNBC’s Megan DeMatteo says a good credit score will help you secure lower interest rates on a personal loan, regardless of what type of loan it is. She gives the example of taking out a 30-year mortgage on a $300,000 house.
A good credit score could save you 1 percent or higher on interest, which could translate to paying at least $200 less per month over the life of the loan (that’s a savings of $72,000 or more over 30 years).
3. A Higher Limit on the Amount of the Loan
According to Irby, a good credit score often means a financial institution will allow you to borrow more money on a bank loan.
They view a high score as proof that you promptly pay back the money that you’ve borrowed, so they’ll be likely to let you borrow more money than someone with a poor credit score.
4. Lower Rates for Car and Homeowners Insurance
Most states allow credit-based scoring, which means that insurance carriers assess your risk based on your credit score.
Nationwide, for instance, claims that it lowers premiums for about 50 percent of its customers based on their credit scores.
5. Better Credit Card Rates
Per Irby, a high credit score will also make it simpler to obtain a lower interest rate on any credit cards you open.
This will help you pay off any credit card balances faster and free up more of your cash for other expenses that arise.
6. An Easier Time Securing a Rental
Credit scores are one of the key factors a landlord considers when screening potential renters.
For example, a bad credit score caused by an outstanding rental balance or past eviction is a huge red flag for landlords. But a high credit score will improve the chance that you’ll be approved to rent the house or apartment that you want.
7. Avoiding Utilities-Related Security Deposits
If you’re moving, one of the expenses you might have is paying a security deposit if you need to establish utility service for your new residence or transfer your current service to another location.
Many utility companies will waive this fee if you have a good credit score, which can save you something in the range of $100-200, as Irby confirms.
Monitor Your Credit Score With Minster Bank
Maintaining a good credit score will help you secure low rates on major purchases, so you can have the financing you need to enjoy these investments. In order to do so, it’s important to check your credit score regularly.
Credit Sense is a tool that can help you stay on top of your credit by providing your latest credit score and report. Available to all Minster Bank customers through the mobile app and online banking, it’s free to use and will NOT impact your credit score. Click below to learn more.
This blog was originally published in July 2020 and updated in January 2023 by Minster Bank. Includes copyrighted material of IMakeNews, Inc. and its suppliers