If it were up to the individual to decide, many people would not accept credit for some reason; Be it private or business. While the negative aspects of debt are usually felt when the borrower is unable to pay, it is hardly a deliberate scenario. If a financial institution deems a borrower’s creditworthiness to be good, or at least decent, most credit facilities are willing to offer credit facilities. There’s so much talk about what a good credit score is, and for most people, it’s a daily struggle to come up with strategies on how to achieve it.
A borrower may feel pressured to repay a credit facility, and it may feel like they’re denying themselves too much to seem good to the banks, but it’s all worth it. It may not seem like a big advantage in itself, but maintaining a good credit score is good for a person, at least as far as future financial support is concerned. Is it possible to have more just because more effort has been made to repay a loan, mortgage, or credit card debt? The honest answer is YES! A pretty decent credit score is good, but getting a good rating is even better considering the many areas that will benefit from it.
Favorable mortgage rate
Due to the fact that mortgages are paid over a long period of time, a homeowner can spend less money on interest if they pay back to the facility within a shorter period of time. Interest is paid even lower if the borrower’s creditworthiness is high. According to data released by MyFico.com, a consumer with an average credit score of 760 or higher would receive a mortgage at an interest rate of 3.74%, while another, whose score is around 700, would receive the same facility at 3.96% interest. What is a good credit score? A cheaper mortgage!
Cheaper car loans
A car is a necessity and if there is a way to get it at a lower value, then it is one of them to get your credit score. On average, car loans are given in the vicinity of $26,000, and considering that the average car owner will repay this within five years, then interest rates definitely make a difference to the amount of money that is repaid. One can expect to save an average of $598 over the entire period with a good credit score. What’s a good credit score if you can’t get a car at a cheaper price?
Credit Card Rewards
Plastic money has gained popularity over the past decade, and while some people consider it a source of cheap credit, the amount of money spent on the card as interest depends on the average valuation of the borrower. The best credit card for good credit offers an APR of 17%, or just 13%. The general assumption that credit institutions make is that a good-rated borrower will quickly pay off their debt and the balance is likely to be low at any given time. When marketing their credit card facility as the best credit card for good credit, some lenders offer potential customers who have a remarkable rating 0% loan interest in the first year. This means that people whose credit score is considered poor or average will have to pay an interest rate in their first year of service. Other benefits that the best credit card for good credit owners can benefit from maintaining good credit scores include free airline miles, loyalty points for using the card, and cash back rewards.
Low interest rates on student loans
Some people are able to fund their own education through savings, sponsorships, or even through programs such as work-study. These facilities are not always available, and the need to obtain funding from a credit institution may arise when the opportunity arises to go back to school. Loans to finance education are granted on the basis of credit quality. The higher the loan, the less risky a loan is considered and to account for this risk, lenders offer appropriate interest rates.
Corporate financing on demand
Starting a business definitely costs money and for many entrepreneurs, the only obstacle between them and prosperity is a financial partner who believes in the validity of his business idea. A startup lacks a solid business credit history and lenders find it easier to consider the consumer score when assessing credit risk. Maintaining a good credit score is therefore not only good for access to finance, but also qualifies for facilities with low interest rates.
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Wendy is now a financial analyst and writer. Wendy has been writing about finance and personal finance since she was a sophomore in high school. She has also been writing for several online publications and published in The Huffington Post, and Forbes Woman.
Wendy is a credentialed financial analyst and has experience working with financial institutions and businesses. Wendy is also a certified financial planner. When Wendy's not writing, she enjoys tending to her many plants, watching TV, and spending time with her family.
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