Bad credit is one of those things that you can live with. It most likely won’t ruin your life and you will find ways to work around it. Still, there are some major and money-saving benefits to having a good FICO® Score.
9. Lower interest rates on all your borrowed money
Your FICO® Score is often the most important factor in determining the interest rate your receive on a credit card or loan. Interest rates can also vary widely – from between 11 and 19 percent on a standard branch bank credit card, to 600 percent on a short term or payday loan from a private lending agency. A high FICO® Score is the best way to ensure you get a low rate and pay less for borrowed money.
8. Get approved without hassle
When you’re struggling with debt and your FICO® Score is bad, it becomes even more challenging to pull yourself out of the trench when you’re consistently denied loans or applications for credit. Focus on improving your FICO® Score in order to expand your access to borrowing when times get tough. Loan and credit card applications will no longer be a source of crippling stress and anxiety.
7. Negotiate your way to lower interest
A strong FICO® Score lends you the power to negotiate with your bank or lender over interest rates for your loans or credit card. You can show your past payment history as proof that you’re reliable. Conversely, a bad FICO® Score leaves you with little bargaining power and banks will rarely adjust their interest rates for you.
6. Increase your limit with ease
The limit of your credit card is known as your borrowing capacity. It is the degree to which you can make large purchases or use your credit. A higher limit is particularly useful in terms of making large purchases such as flights or borrowing a significant amount on a mortgage or car. You can get approved for a loan with bad credit but the amount will be limited.
5. You can easily find a place to live
It is becoming increasingly common for landlords to use FICO® Scores in the screening of potential tenants and renters. If you want to eliminate the possibility of being denied your dream apartment due to bad credit, start working to improve your FICO® Score as soon as you can. The freedom of mobility a good FICO® Score affords you will be immediately apparent.
4. Minimize your insurance pay out
Auto insurers are yet another category of companies that care about your FICO® Score. They use them to determine who is more likely to make a claim and file it with their insurance provider. People with bad credit on average file more; therefore, they are slapped with higher premiums as a deterrent. You’ll pay less for your car insurance simply by having a high FICO® Score.
3. Get a cell phone on contract with no security deposit
Don’t you love the feeling of going in to your cell phone provider looking for an upgrade or a new phone, only to be offered a free or majorly discounted phone for signing a contract with the provider? Some people are unaware that this is a luxury that people with good credit ratings enjoy exclusively. Others with less than ideal FICO® Scores must get a pay-as-you-go plan and pay full price for the phone itself.
2. Skip that pesky deposit
Everyone knows that when you’re moving, there are a lot of expenses to juggle. The last thing anyone needs, in the middle of a stressful move, is the extra burden of a $200 security deposit on utilities for the new place. You get to skip this with good credit. Likewise, switching your utilities from one location to another won’t require you to pay a deposit. The absence of a looming deposit makes moving a lot less daunting, especially when it’s on a tight budget.
1. You get a gold star
Okay, so there’s no gold star and there’s nobody waiting to shake your hand and throw you a party for upping your FICO® Score. Still, having a good FICO® Score is something worth bragging about. You can feel confident in the state of your finances.
Featured Image: Thinkstock/evgenyatamanenkoPosted on May 22, 2023