Hanscom FCU MoneyWisdom Blog

9 Benefits of Having a Good Credit Score

Written by Hanscom Federal Credit Union | Jan 22, 2019 1:03:00 PM

My husband and I got into some financial trouble several years ago due to a job loss. We watched our credit card bills grow and our credit scores tank. It was a depressing time in our lives.

So we put away all the credit cards and changed to a cash-only lifestyle. Though it took a few years, my credit score is very close to 800 now. I went from being unable to qualify for credit to purchase a badly-needed new refrigerator, to opening up a mailbox full of credit card offers. I sleep much better now than I did then. Life is definitely much better with a good credit score.

My story is a reminder that having a good credit score — along with a good credit report — can affect all areas of your life. I mention credit reports because, as we all know by now, credit reports are no longer just about finances and loan rates. Everyone — from employers to insurance providers, prospective spouses to landlords — is using your credit information to make all kinds of judgments about you. Fair or not, it’s a trend that seems to be here to stay. So, working to keep your report healthy will help you in the long run. My advice is that you start by improving your credit score.

First of all, what’s considered a “good” credit score?

The average score in the U.S. is about 689 and a really good score is generally considered to be above 720 or so (scores range from 300-850).

And what’s the best way to get a good score?

  • Manage your money carefully
  • Pay your loans and bills on time
  • Stay within your credit limits
  • Borrow or charge only what you’re capable of paying back

Having a good score could help you do all of the following:

  1. Qualify for lower rates and better repayment terms on all your loans
  2. Buy or rent a home or apartment at a great rate
  3. Land a job
  4. Increase your borrowing capacity, which can increase your credit score by a few points
  5. Get a lower rate on a car lease
  6. Qualify for a lower weekly rate on a vacation rental
  7. Receive offers for credit cards with valuable rewards programs, free gifts, and cash back deals
  8. Get better car insurance rates — studies show that people with bad credit tend to file more claims so they get penalized with higher insurance premiums
  9. Get married! (Some people check the credit score of people they hope to marry)

If your financial situation has been a mess and you’re just crawling out of a really bad credit score, raising it a few points can help. You may find that you can:

  • Get a cell phone without a security deposit
  • Have utilities turned on when you move without first having to place a large cash deposit
  • Have more options about where you can live
  • Qualify for a credit card with an interest rate in the teens rather than the 20 to 30% range

I’ve been on both ends of the spectrum with my credit score and I can tell you that it’s better to have a high one. And if you do mess up and miss a payment? It won’t hurt you nearly as much if you have a great score to start with.

If your score is above average, that’s great. If not, start working on improving it today. I promise you’ll enjoy life a lot more.

 

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