Your credit score may not be something you spend a lot of time thinking about, but you really should. The higher your score, the more chances you have to win in several aspects of life. Here are some of the ways a strong credit score can work for you.
1. It can help you get a lower mortgage rate
Need to finance the purchase of a vehicle? You are likely to get a lower borrowing rate on an auto loan if your credit score is in good shape. Likewise, if you’re looking to buy a home, you’ll be more likely to qualify for a lower interest rate on a mortgage if your credit score is strong. And the less interest you have to pay on the loan you take out, the more money you save.
2. It can help you rent a house
Landlords usually do credit checks on tenants before agreeing to let them sign leases. The higher your credit score, the more likely you are to be approved for a rental. This is especially true these days.
Many landlords were burned during the pandemic when an eviction ban was enacted, which prevented tenants from being evicted from their homes despite not paying rent for months. This rule was put in place due to an unprecedented unemployment crisis and, fortunately, the job market is in much better shape today. Nonetheless, as a result of this eviction ban, landlords are more likely to favor tenants with a strong credit history and score.
3. It can help you get a great credit card offer
Those credit cards offering extra cash back at the pump and awesome sign-up bonuses? Not everyone is eligible to get them. The higher your credit score, the more likely you are to take advantage of great credit card offers and enjoy perks like extra rewards.
4. It could save you money on insurance
You’d think your credit score wouldn’t really play a role in your insurance premiums, since you’re paying for a service rather than borrowing money. But in reality, car insurers and home insurance companies often have a habit of looking at applicants’ credit scores. And the higher yours, the more you could strike a deal on your premium rates.
It pays to increase your score
Obviously, there’s a lot to be gained by having strong credit, so if your score might need a little work, take these steps ASAP:
- Review your credit report for errors and correct any that could lower your score.
- Pay all incoming bills on time.
- Reduce your credit card balances.
- Get added as an authorized user to a family member’s credit card if your lack of credit history hurts your score.
You don’t need to have perfect credit to take advantage of the above opportunities. But it’s definitely worth getting your credit score in the 700s or higher. Once your score hits that point, it really opens up a world of potential benefits.
Alert: The highest cash back card we’ve seen now has 0% introductory APR through 2023
If you use the wrong credit or debit card, it could cost you dearly. Our expert loves this top pick, which includes a 0% introductory APR until 2023, an insane reimbursement rate of up to 5%, and all without annual fees.
In fact, this map is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.
Read our free review
We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.