Not everyone has a good credit score, but having a bad credit score does make life a little harder as far as you finances go. While you can slide through life with bad credit, it isn’t always an easy road and it certainly isn’t cheaper. By establishing a good credit score, you’ll find that it can help you save money making your financial life much easier and it can help you if you decide to become a small business owner.
There are several reasons why maintaining good credit is beneficial to your finances and your everyday life, we have found 10 of the best benefits to having a good credit score as opposed to a bad one.
1. Lower Interest Rates
This is especially important for small business owners. With a higher credit score you will receive lower interest rates on business credit cards as well as your personal credit cards. This also holds true if you are trying to get a small business loan for your business. Interest rates lower with a higher credit score because a higher credit score just looks better to lenders.
Higher credit scores will almost always qualify you for the lowest interest rates on loans, and credit cards. Think of it this way, the lower interest rates you pay, the quicker you can pay off the loans and have more money to make other purchases. Lower finance charges on personal credit cards, business credit cards, personal loans, and small business loans is always a good thing.
2. Increased Chances for Credit Card or Loan Approvals
Having a good credit score isn’t necessarily a guarantee that you will get approved, but it greatly increases your chances. Lenders often look at other aspects like your income, and debt ratio when deciding whether to give you a loan or credit card. Frequently, those individuals with low credit scores will not try to get a loan or apply for a new credit card because they have been turned down before for some reason.
If you have a high credit score, you can feel more confident about applying for a new credit line or loan, and your chance of being approved will be higher.
3. Allows for More Room When Negotiating
Individuals with a low credit score are often stuck with the interest rate that the lenders offer. There is no room for negotiation on loans when lenders see you have a lower credit score even if your income and debt ratio are in decent shape, they still consider you too much of a risk and will sometimes raise the interest rates because of your credit score.
On the other hand, if you have a good credit score, they often trip over themselves trying to please you with the lowest interest rates available, and even then you still have room to negotiate for lower rates. To add to your bargaining armory, you could even take advantage of other attractive offers you have received from the company’s competitors. The chance for negotiation is there and you should take advantage of it always.
4. Get Approved for Higher Amounts
A good credit score can help get you approved for a higher amount of money and higher lines of credit. In general, your borrowing capacity is determined by your income and credit score. But with a high credit score, some banks and lenders are willing ot let you borrow more because they see that you have paid back on time what you have borrowed previously.
Getting approved when you have a low credit score isn’t out of the question but due to your score, you will not get approved for as much money, your funding will be limited.
5. Makes Approval for Rental Houses and Apartments Easier
While it is unfortunate to some people, more landlords are now using credit scores to screen their potential tenants. A low credit score that includes an overdue or outstanding rental balance or eviction will damage your chances of getting into an apartment or rental house. Landlords that approve tenants that have lower credit scores are still around, but it’s getting harder to find one.
By having a high credit score you can skip the hassle of trying to find a landlord that allows tenants with damaged credit, and getting into an apartment will be much easier.
6. Better Car Insurance Rates
It doesn’t matter where you live in today’s society, auto insurance rates are expensive. Not all insurance companies will use your bad credit against you, but it does happen. By their way of thinking, they figure that individuals with low credit scores will file more claims causing the insurance company to lose more money. For this reason, if you have a lower credit score, you could be penalized and have to pay higher rates for your car insurance. But if you have a higher or good credit score, chances are your premium rates will be much lower than if you have bad credit.
7. Be Able to Get a Contract Cell Phone with No Deposit
Nowadays, it’s hard to get a cell phone contract when you have bad credit, many phone service providers charge a large security deposit if your credit score is below a certain number. Some companies may not even give you a contract if you have a low credit score. Then you’re stuck with a prepaid pay-as-you-go plan, and a cheaper quality phone that can cost more money than you’re able to spend.
With a high credit score, you will not be charged a security deposit and could receive discounts on the latest phones on the market. You will be able to obtain a contract without any trouble.
8. No Security Deposit on Utilities
Many utility companies are now requiring security deposits to begin new service for customers, especially if they have low credit scores. When you’re relocating or a natural disaster occurs causing you to have to move, coming up with a security deposit of $100 or more can be inconvenient.
A good credit score means you will not have to pay a security deposit when relocating, transferring services to a new location, or having utilities started in your name.
9. Approval for a Business Loan
Entrepreneurs often do not have enough cash on hand to get their small business up and running the way they want to. Having a high credit score can help small business owners establish business credit and obtain a business loan with low rates.
A business credit score is just as important as a personal credit score and the two can work together to help each other out. Having a high business credit score can help you obtain a business loan for your start up, expenses, payroll, supplies, product manufacturing, and much more. With a business loan you can often obtain a business credit card with higher limits, providing your credit score is good.
Business owners with low credit scores will have a hard time getting approved for a small business loan or a business credit card, even if you do not need a high limit. This can in fact can stop your business from succeeding the way you had hoped it would. Consider building your credit up, clean up the low score, and turn it into a good score and you’ll have a better chance at obtaining the funding you’ll need for your business. Until then, you’ll have to come up with more creative ways of raising money for your business.
10. Simple Bragging Rights
If you’ve worked hard to change your credit score from bad to good, then you’ve earned the right to brag about it, it isn’t a simple task. If you’ve only ever had good credit, then kudos to you and keep up the good work. Either way, you’ve earned the right to brag about it a little or a lot.