If you don’t have the best or worst credit, you may think nothing of being in the middle of the road. Even then, you still have plenty of reasons for boosting your score. Here are several perks you may miss out on by having OK credit rather than good credit.
Low Interest Rates
While you may not plan on applying for a loan or credit card soon, life has a way of flinging curveballs. If you don’t have adequate emergency savings to cover a car repair, hefty medical bill or a job loss, you may have little choice but to apply for a credit card or financing. When you do, having a good credit score means you enjoy a low interest rate, saving you money while you focus on getting your life back on track.
Improved Chances of Loan Approval
Say you want to buy a house or a new car soon. You could wait to save up enough to buy whatever you need outright, but that may take longer than you’d like. You can save time by securing financing, but you may have a high risk of being denied if you do not have the best credit. True, having good credit does not automatically mean you’ll receive approval, as other factors determine whether lenders agree to work with you. At the very least, good credit increases your chances of getting a loan.
Cheaper Auto Insurance
When the time comes to renew your auto insurance, or if you want to change coverage providers, insurance companies consider a person’s credit when setting premiums. Much like property owners, insurance providers often view those with poor credit as risks, ones they may hesitate to cover. To hedge their bets, they may charge drivers with poor credit higher premiums.
Easier Time Renting an Apartment or House
Do you see yourself moving into a new rental home or apartment in the future? If so, property owners often consider the applicant’s credit when deciding whether to approve them for tenancy. Applicants with poor credit may have an eviction or a history of missed or late payments on their credit record, making property owners nervous about renting to them. Of course, people with great credit may make for terrible tenants, but landlords are usually more willing to take the risk.
Higher Credit and Financing Limits
Maybe instead of applying for additional credit cards, you’d rather increase the limit on your current card. If so, you’ll have better luck being approved for a higher limit if you have great credit. This is because banks, lenders and credit card companies know borrowers with higher scores have a history of making on-time payments, which makes them more likely to use their higher credit limit more responsibly.
Touching back on applying for a credit card or loan for emergencies, if you have good credit, you have a better chance of receiving a higher limit. Even if you do not need as much as a lender may offer, it’s nice to know the option exists.
Sidestep Deposits on Utilities
Besides having less of a hassle with renting, beefing up your credit score may mean you don’t have to drop a deposit on utilities for a new space. Deposits may run as much as $100 or $200. If life forces you to move to a new location, good credit may clear hurdles when setting up utilities during a difficult time.
While you do not have to devote every free minute of your life to boost your credit, implement a simple financial strategy that bumps your score up a few points here and there. A little hard work is sure to take you farther than you may realize.