Today, societies are becoming more and more dependent on credit for making purchases and decisions. Nowadays, good credit is important not just getting a loan or credit card. Businesses are making it crucial for customers to have good credit scores before extending their products or services to them.
Having a great credit history and maintaining a good credit score could have a dramatic impact when you consider applying for a credit card or even short-term loans.
What are the Benefits of a Good Credit Score?
1. Buying a Home
Before you could buy your dream home, lenders would wish to know that you won’t fail to pay on your mortgages. In case you do not have a good credit score, lenders would consider it to be risky to give you any mortgage loans. If you get a mortgage loan, your interest rate is impacted by your credit score which ultimately impacts the monthly mortgage payments which you need to pay. A bad credit score could land you with higher mortgage payments. Even worse, a bad credit score could be a reason for rejection of your mortgage loan application.
Also read: 8 Tips to Improve Your Credit Score for Mortgage
2. Starting a Business
Most of the people have dreams of being their boss and having their own business. Most of the startups require if not a sizable pool of cash, a bridging loan for starting their business. Bridging loans is essential for starting a business, but it’s important to have your figures correct for expected rates and repayment costs. If you’re interested in taking out such a loan, you can take the bridging loan calculator for a good indication of said figures. Amongst other things, you would require a good credit score to qualify for such a loan.
3. Buying a Vehicle
Buying a car or any other vehicle is a very common thing today, and most people go for auto finance or auto loans when they’re considering buying a vehicle. Vehicle loans are typically of smaller amounts, so they’re usually easier to get even with a poor score. However, with a poor credit score, one would only qualify with a high rate of interest and a bigger down payment on the vehicle. It could imply that you pay several thousand more for the same vehicle compared to another buyer with a good credit score.
4. Better Interest Rate on Loans
While having a good credit score is a crucial factor in obtaining any financial assistance, most banks still give loans to individuals with poor credit scores. In case your credit score is dented, you would need to provide much more documentation for a loan. You would in all likelihood have a higher rate of interest on your loan. This is how banks and other financial institutions, such as Qualia Credit, outweigh their risk of loaning their funds to you. You can even increase your credit score with rent payments and this is commonly regarded as one of the best ways to increase your score.
5. Enhanced Borrowing Limits
Your borrowing capacity is dependent on not just your income but also your credit score. One key benefit of maintaining a good credit score is that the banks and financial institutions will lend you more funds as you have demonstrated that you would pay back the loan on time without default.
The Bottom Line
By now, you perhaps understand the importance of a good credit score. A good credit score could have a positive impact on several facets of life. If you are not there yet, you don’t need to worry! You could still improve your credit score over time with the help of Financegab. As your credit score is defined by how you pay your bills, banks, landlords, employers, and even utility providers use your credit score to predict your financial responsibilities. Anytime you require borrowed funds or even services, your credit score is evaluated. This is why it is important to maintain a good credit score.
