With the high inflation rate, people would usually find themselves in a tight financial situation. The cost of living goes up significantly while salaries and wages remain almost the same. The condition results in a gap between your income and your expenses. Employees and pensioners or those under benefits find themselves short of cash several days before the next pay or cheque arrives. To bridge the gap, people either take a loan or secure a credit card. If you think that you might find yourself in this situation later, having good credit will help make things easier.
Here are the seven benefits of having a good credit score.
Better Chance of Getting Approval for Loans and Credit Card
Have you ever wondered why a lender approved your friend’s loan application but rejected yours even when you have the same job and income? One of the possible reasons could be that your friend has a good credit rating while yours is inferior. Being able to borrow a significant amount is one of the benefits of maintaining a good credit rating. You can start building your score now to be able to get approval for loans and credit cards.
People with good credit rating could enjoy a flat interest rate both on loans and credit cards. Lenders consider persons with good credit as creditworthy, which means that they can rely on these debtors to pay back what they borrowed. Because of the low risk that they might not be able to repay their loans on time, lenders charge them the best interest rate. With good credit, you can save on the cost of the loan and other charges.
More Negotiating Power
Your good credit record would allow you to negotiate the terms of a loan or a credit card. Your lender knows that with your high credit rating, many other lending companies would be happy to extend you a loan on your terms. Banks and lending companies make money through borrowers. A client with a good credit rating contributes to their profits; hence, lenders would be happy to negotiate with him.
Take a Loan or Credit Card with Higher Limits
A person that needs a significant amount of money can easily take a loan at the maximum that a lender offers. A bank that lends £5000 to £500,000 would be willing to give you up to the maximum amount, making it possible for you to build or buy a home or start a business.
Avoid Security Deposits for Utilities
Security deposits can be expensive when you are transferring to your new home or relocating. You might decide to take a loan to cover the expense. With your good credit rating, you might not have to pay a deposit for utilities. Companies are confident that you will not run away from your bills and not asking a deposit from you is not a risk.
Better Car Insurance Rates
Another reason for you to take a loan is your car insurance payment. Do you know that people with good credit can enjoy special insurance rates for their vehicles? You would pay less to insure your car because the company considers you as low risk and reliable client.
No Security Deposit on Cell Phone on Contract
Nowadays, phone services provider offer the latest models of cell phones that one can get on contract, which means that you pay the price monthly. Customers with bad credit must pay a security deposit before they can get a phone. However, if you have good credit, you do not have to pay a security deposit. You can have the phone and pay the agreed monthly payment.
With all the benefits that a person with good credit can enjoy, doing your best to get a high credit score is worth all the efforts and sacrifices.