One of the most important scores that you can earn in your life is a solid credit score. While good grades in school are important for graduation and landing a good job, a nice credit score can wind up saving you thousands that you might otherwise have to spend. Here are some areas where a good credit score can really pay off.
Lower Mortgage Rates
While some Millennials are foregoing a home purchase, most people will still wind up trying to buy a house at some point. Those who are considered a big credit risk may not be able to qualify for a loan at all. Prospective borrowers who can barely qualify for a mortgage will wind up paying more than those who have credit scores that are in the highest range. Just paying a percent or two more on a loan that can easily reach six figures will cost many thousands of dollars over a 15- or 30-year period of time. Higher credit scores make you look like a lower risk, so lending institutions are willing to loan money at a lower rate. It’s that simple.
Consolidate Student Loans
Outside of mortgages, student loans are one of the biggest areas of debt for most people. Many students are forced to take out private student loans after reaching the max that’s offered by the government. These loans tend to have much higher rates, and borrowers cannot discharge them through bankruptcy. Those who have good credit are more likely to be able to consolidate and refinance these loans at a lower rate. This will have the double benefit of lower monthly payments as well as less money going to interest each month. Those who are able to maintain their previous payout schedule should be able to accelerate the payoff of these debts.
Take Advantage Of Bank Bonuses
If you have a good credit score, another way to benefit is through bank signup bonuses. These can come from opening up a new bank account or credit card. As long as you pay off your bill in full each month, banks are willing to pay a bonus of up to $500 or more to get you to use their credit cards. This is one way to really accelerate your savings as long as you pay off the credit card each month to avoid interest.
Get Lower Insurance Rates
Those with lower credit scores are looked at as high-risk customers, even in areas where it might not seem like it would matter. Some insurance companies perform credit checks before deciding to insure a new client. Those who are perceived to be a higher risk to the company will have to pay higher rates. This means that a low credit score can hurt you if you choose to own a car because most state require at least liability coverage on a vehicle.
Having good credit can pay off in many diverse ways. These are just four, but there are other areas of life in which a good credit score can help. Paying off at least the minimum you owe each month and keeping your credit utilization at a relatively low percentage are ways that you can ensure that your score improves over time.