5 Benefits of Improving your Credit Score
Buying a home, traveling around the world, guaranteeing good health services or owning your own vehicle are life goals that can be achieved more safely if you have a good credit score.
Remember that when you have a credit card or loan or contract a telephone service, you are already evaluated by credit bureaus, which reviews your repayment history, number of applications, number of credit and other factors and gives you a score. If you have 650 to 700 points, you are a good credit user, and if you have 700 to 850, you are an excellent user.
Here are five benefits of improving your credit score:
1) Lower interest rates
When you have a good credit score, you are offered loans and cards with lower interest rates, since you will be considered a reliable and responsible user for the lender.
In addition, if your score is excellent, you can access platinum cards and reliable loans with low interest rates.
But be careful, this does not mean that you should automatically accept these offers if you are going to incur debts that you will not be able to pay. Remember that you should only accept a credit card or loan when you really need it.
2) You will be approved for long-term loans
A good credit score opens the door to easier access to long-term loans, such as mortgages or auto loans, which are loans that institutions only grant to people with good profiles.
However, remember that you will be paying for these commitments for many years, so before taking them out, you should make sure that you really have the solvency to do so. Also, do not forget to compare before accepting any of them.
3) Access to fintech loans
One of the most important advantages of improving your credit score is that you will be able to access loans offered by fintech companies or peer to peer lenders, which have multiple advantages, such as interest rates well below those offered by traditional institutions and fewer charges, in addition to the fact that the process is completely online.
Many of these companies focus on people with a good credit rating, since they need to keep their interest rates low and they achieve this by having a low overdue portfolio. So improving your score will help you save a lot in interest and time, thanks to companies like these, which have fair loans.
4) Higher credit limit
Usually, the credit card we use has a spending limit that we cannot exceed, which can increase if your score does, since the financial institution will trust you more and will be willing to lend you more money.
Just remember to avoid making mistakes and turning it into a “poisoned gift”, making compulsive expenses that lead to over-indebtedness. A very useful tip: never exceed 50% of your credit limit, as this can lower your score.
5) Consolidate debt
If you have several loans or credits in force, improving your score will allow you to be more easily approved for a debt consolidation, that is, a loan with lower interest to pay your existing debts.
This option allows you to focus your efforts on a single payment and save up to half of your interest.
So now you know, improving your score really brings excellent benefits for your personal finances, which includes access to better credit.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.