Here are some of the few pieces of rock-solid financial advice everyone should strive to follow:
- Save enough for emergency
- Pay your debts
- Don’ spend more than you earn
However, a bit of financial advice that a majority of the experts often fail to point out is having a good credit score.
Now, you might be wondering, why you need to evaluate your credit score and why you need to keep your score high.
Well, for starters, a credit score is an essential part of your financial health.
Financial health is as important as it can get, especially considering that a majority of the Americans are heavily reliant on credit.
Or rather, most of the individuals rely on the ability to purchase things with borrowed money that is going to be repaid over time.
While there are several factors that lenders consider before approving majors purchases such as a home or car, they almost always rely on credit rating for the evaluation process.
And having a good credit score has numerous benefits including:
Savings on Interest on Big-Ticket Loans
Generally, borrowers with a good credit rating normally enjoyed lower interest rates.
Sure, a 1% difference might not seem such a huge difference on paper, but when it’s done on a big-ticket purchase such as that of a home or car, you’ll see huge savings.
For instance, assume you take a fixed mortgage for 30 years at $250,000 at 5.5%; this will set you a cool $511,110.
Now, if the rates are subsidized by 1% to 4.5%, the same borrower will pay $456,017, a difference of nearly $55,993.
Better Term of Loan Products
If you have a good credit score, lenders are normally willing to approve their available loan products to you, because they know you’re more than likely to repay, and in good time, which is good for their business.
And given that the borrowers have plenty of options available, they can shop around and compare the rates more effectively to find the best lender.
And so, it is more likely for the borrowers with good credit to choose lenders with better terms and better rates, which will ultimately make it easier for them to save while making their big purchase.
Accessing Best Credit Cards
Having a good credit card rating normally affords you the chance to access the best credit card on the market with regards to interest rates and rewards systems such as cashback offers, incentives, and travel points.
In some instances, borrowers with a good credit rating are also likely to qualify for an introductory 0% APR purchase.
If you have a good credit score, you’re more likely to get accepted by an insurance firm, and even better, you get to enjoy lower premium rates since your provider considers you risk-averse.
Plenty of Housing Options
A majority of the landlords are now using credit score metrics to determines the financial trustworthiness of their potential clients.
Now, if you have a poor credit score, you’re likely to be denied a housing option by your landlord.
Ad when they do, they’ll probably demand security deposit.
Security Deposit Waiver
Speaking of security details, it’s not uncommon for the utility service companies to demand security deposit, especially for individuals with a poor credit score.
Like the house landlords, these utility companies are likely to consider your credit scoring to determine whether you’re likely to pay the bills on time.
Although this is a highly controversial practice, some of the employers are now considering the credit score rating of their potential applicants to determine whether they’re suited for the task.
Generally, having a poor credit score might reflect poor financial management, which might be a reflection of your overall self.
Sure, while we understand that some reasons for a poor credit scoring system are beyond our means, it’s something that you ought to keep at the back of your head when making a job application.