To start with, what is a Credit Score? At least if we know what Credit Score it, it would be helpful to know why having a good Credit Score is important.
Credit score model was created by Fair Isaac Corporation commonly known as FICO, mostly used by financial institutions like Banks. Credit score is a portion of someone’s credit history. It indicates how likely a person is to pay a debt. When someone has a higher credit score, the better he/she looks to possibility lenders and the higher his/her chance of getting (more) loan or credits from a creditor or lender.
Benefits of Having a Good Credit Score
Generally, a credit score is based on:
- How likely a person is to repay a debt
- Determines what kind of loan one can get
- Credit utilization
- Length (Period/tenure) of credit utilization
- Types of credit i.e. how many sources of borrowing e.g. Mortgage or car loan.
Do you know that a good Credit score can work in your favour while trying to get a job? Credit scores ranges from excellent to poor:
- Excellent (800 – 850);
- Very good (800 – 750);
- Good (700 – 650);
- Fair (600 – 650);
- Poor (550 – 300).
To acquire a good credit score, you must be at the scale of 700 and above which helps you get low interest rate when you get a loan.
Here are some benefits attributed to having a good credit score.
1) Loan Interest Rate Reduction
A good credit score will earn you a low interest rate because the loan you obtain is linked to the history of your credit score. If you are an excellent credit scorer, you are eligible for a low interest rate on all loans given to you.
2) Ability To Bargain
A good or excellent credit score gives you the ability to bargain and your credit score is like collateral which guaranteed your ability to pay when you obtain a loan.
3) High Chances Of Getting Hired
When it comes to hiring, most companies want to know who they’re bringing into their system, in some cases, they make enquiry on candidate’s credit history. They request for your permission to perform a credit score check before sending you an offer letter. A good credit score is evident that you are a responsible citizen and good for their company. Most companies reject individuals with poor credit score and such applicants tend to find it difficult to get their desired job.
4) Easy Rental Application Process
Most landlords and property management companies look into a person’s credit score before renting out their properties. To acquire or rent a property easily, your credit score must speak well of you which means you must have a good or excellent credit score.
Most times, if you have a good or excellent credit score, you might not need a consigner. Your credit score history gives the landlord or property manager a sort of assurance that you will pay back as at when due.
5) A Good Reputation
A good credit score is something to be proud of; it helps you to stand out and gives you upper hand in almost everything. It increases your chances of getting things you want/need easily.
6) Less Insurance Payments
People with fair credit score have been observed to pay much more for their home insurance than those with excellent credit score. Most insurance companies use information from an applicant’s credit report and insurance history to develop his/her insurance risk score. So, what they do often is to place higher insurance premium on people with low credit scores.
7) Less Stressful Life
The benefits of having a good credit score go beyond your financial life; it makes you happy and live a less stressful life. It also help you focus on building your career and life since you don’t have to constantly worry about money or your account becoming red.
8) Reduction On Phone Plan Deposits
Most phone companies look into your credit card history before qualifying you for a phone plan. Your credit score distinguish you from high phone plan deposit or low phone plan deposit. If your credit score is low, you run on the plan of Pay As You Go but if you have a good credit score, you are qualified for a reduced deposit on phones.
9) Increased Credit Limits
Good credit score gives you increased credit limits which means lenders can borrow you more without the fear of you not paying back as at when due. A good credit score will increases your chance of getting more lenders when you apply for loans.
10) Shape Your Financial Future
A good credit score plays an important role in how you shape your financial future. Keeping a good credit score helps you greatly when making plans for a secure future like getting married, buying a house, starting a business, getting a car, huge investment and so on
Conclusion
Working toward an excellent credit score takes a lot of work. You have to be determined, focused, and diligent about the payment of your bills. Stick to your budget, avoid impulse buying, and buy what you need and can afford. Having a good credit score will create access to a lot of benefits which pay off for the effort you have put into getting a good credit score and when the benefits come, make sure you enjoy it to the fullest.
To start with, what is a Credit Score? At least if we know what Credit Score it, it would be helpful to know why having a good Credit Score is important.
Credit score model was created by Fair Isaac Corporation commonly known as FICO, mostly used by financial institutions like Banks. Credit score is a portion of someone’s credit history. It indicates how likely a person is to pay a debt. When someone has a higher credit score, the better he/she looks to possibility lenders and the higher his/her chance of getting (more) loan or credits from a creditor or lender.
Benefits of Having a Good Credit Score
Generally, a credit score is based on:
- How likely a person is to repay a debt
- Determines what kind of loan one can get
- Credit utilization
- Length (Period/tenure) of credit utilization
- Types of credit i.e. how many sources of borrowing e.g. Mortgage or car loan.
Do you know that a good Credit score can work in your favour while trying to get a job? Credit scores ranges from excellent to poor:
- Excellent (800 – 850);
- Very good (800 – 750);
- Good (700 – 650);
- Fair (600 – 650);
- Poor (550 – 300).
To acquire a good credit score, you must be at the scale of 700 and above which helps you get low interest rate when you get a loan.
Here are some benefits attributed to having a good credit score.
1) Loan Interest Rate Reduction
A good credit score will earn you a low interest rate because the loan you obtain is linked to the history of your credit score. If you are an excellent credit scorer, you are eligible for a low interest rate on all loans given to you.
2) Ability To Bargain
A good or excellent credit score gives you the ability to bargain and your credit score is like collateral which guaranteed your ability to pay when you obtain a loan.
3) High Chances Of Getting Hired
When it comes to hiring, most companies want to know who they’re bringing into their system, in some cases, they make enquiry on candidate’s credit history. They request for your permission to perform a credit score check before sending you an offer letter. A good credit score is evident that you are a responsible citizen and good for their company. Most companies reject individuals with poor credit score and such applicants tend to find it difficult to get their desired job.
4) Easy Rental Application Process
Most landlords and property management companies look into a person’s credit score before renting out their properties. To acquire or rent a property easily, your credit score must speak well of you which means you must have a good or excellent credit score.
Most times, if you have a good or excellent credit score, you might not need a consigner. Your credit score history gives the landlord or property manager a sort of assurance that you will pay back as at when due.
5) A Good Reputation
A good credit score is something to be proud of; it helps you to stand out and gives you upper hand in almost everything. It increases your chances of getting things you want/need easily.
6) Less Insurance Payments
People with fair credit score have been observed to pay much more for their home insurance than those with excellent credit score. Most insurance companies use information from an applicant’s credit report and insurance history to develop his/her insurance risk score. So, what they do often is to place higher insurance premium on people with low credit scores.
7) Less Stressful Life
The benefits of having a good credit score go beyond your financial life; it makes you happy and live a less stressful life. It also help you focus on building your career and life since you don’t have to constantly worry about money or your account becoming red.
8) Reduction On Phone Plan Deposits
Most phone companies look into your credit card history before qualifying you for a phone plan. Your credit score distinguish you from high phone plan deposit or low phone plan deposit. If your credit score is low, you run on the plan of Pay As You Go but if you have a good credit score, you are qualified for a reduced deposit on phones.
9) Increased Credit Limits
Good credit score gives you increased credit limits which means lenders can borrow you more without the fear of you not paying back as at when due. A good credit score will increases your chance of getting more lenders when you apply for loans.
10) Shape Your Financial Future
A good credit score plays an important role in how you shape your financial future. Keeping a good credit score helps you greatly when making plans for a secure future like getting married, buying a house, starting a business, getting a car, huge investment and so on
Conclusion
Working toward an excellent credit score takes a lot of work. You have to be determined, focused, and diligent about the payment of your bills. Stick to your budget, avoid impulse buying, and buy what you need and can afford. Having a good credit score will create access to a lot of benefits which pay off for the effort you have put into getting a good credit score and when the benefits come, make sure you enjoy it to the fullest.
