Having a good credit score can make🐓 life a lot easier. Not only does it make getting approved for a loan or credit card easier, but it can help you qualify for the best interest ra🌄tes. You may also run into fewer hurdles when renting an apartment or applying for a new job. 

Good credit has all these benefits because it suggests to lenders and other interested part🧸ies that you pay your bills on time. Your credit score represents how you’ve handled credi𒆙t in the past, and a good score indicates that you manage your money well. 

Here’s a closer looℱk at what constitutes a good credit sc🐻ore, along with the various benefits of having one.

Why Is It Important to Haꦡve a Good Credit Score?

According to FICO, the average FICO credit score in the U.S. was 717 in October 2023, the most recent month for which data is available. That falls toward the high end of the “good” credit score tie🌃r. 

FICO and VantageScore are the two most popular scoring brands. FICO scores are more commonly used by lenders, but it’s generally easier for consumers to check their VantageScores. Here’s a look at how FICO scores and 澳洲幸运5官方开奖结果体彩网:VantageScores break down:

Your 澳洲幸运5官方开奖结果体彩网:credit score is based on multiple factors, including your payment history and how much of your available credit you actually use. Lenders look at your score when evaluating your application for a loan or credit card. A 澳洲幸运5官方开奖结果体彩网:good credit score suggests that you’ve managed credit well in the past anಌd are likely to pay back 💖borrowed money. 

Here’s a closer look at the benefits that ꧒can come with ha꧟ving good credit. 

Better Chances of Credit Card and Loan Approval

A poor credit score can make it difficult to qualify for a credit card or loan. You may be limited to a 澳洲幸运5官方开奖结果体彩网:secured credit card, whic꧂h requires a deposit upfront, or a co-signed loan, which maꦡy be a financial burden to your co-signer. 

With a good credit score, you’ll have a better chance of being approved for the best credit cards or the 澳洲幸运5官方开奖结果体彩网:loan you want. You’ll still have to meet other requirements, such as having an acceptable income and debt-to-income ratio, but your credit score won’t stand in the way of a😼pproval.✨ 

Faster Approval

A good credit score could shorten the timeline for credit card and loan approval. Some credit card companies send out “澳洲幸运5官方开奖结果体彩网:pre-approved” offers after checking your score via a soft inquiry, and lend🐽ers may let you pre-qualify for a loan online.

These offers might more accurately be called “pre-screened,” since you’ll still have to fill out an application. But you may be app♔roved more quickly since the company already knows you have good credit. 

Lower Interest Rates

Interest is the cost you pay to borrow money. Lenders usually offer a range of rates for a particular loan product, with the lowest rates going to borrowers 𝓰who have the strongest credit. 

Qualifying for a low rate on a loan can make a huge difference in your cost of borrowing. For example, a 澳洲幸运5官方开奖结果体彩网:lower interest rate on a mortgage could sav🔴e you hundreds or even thousands of dollars over the life of the loan. Plus, payiꦜng less in interest may enable you to pay back your debt faster, which would free up more of your budget for other priorities. 

Higher Credit Limits

A good credit score indicates that you’re likely to pay back borrowed money on time, so credit card companies may be willing to extend you a higher 澳洲幸运5官方开奖结果体彩网:credit limit. This ca⛦n actually make i🍒t easier to maintain a better credit score because you may have more available credit. If you get a high credit limit, however, be careful not to spend more than you can afford to pay back, or you risk racking up fees and interest and damaging your good credit. 

Higher Loan Amounts

Lenders may offer higher loan amounts to borrowers with good credit scores. Some personal loan providers, like SoFi for instance, lend as much as $100,000, but may limit the amount offered to borrowers with fair, poor, or no credit. 

Better Insurance Rates

Insurance companies often consider your credit score when evaluating your application and 澳洲幸运5官方开奖结果体彩网:assigning your premiums for home and car insurance. A good credit score can help you qualify for discounts on y🐠our coverage.

However, some states have laws about how insurers can use credit when considering your application or setting rates—or whether they’re allowed to consider it at all. For example, insurers are not allowed to consider your credit when setting your premium for home insurance or when deciding whether to cancel your policy. If you’re not sure about the ⛄laws where you live, check with your state’s department of insurance. 

Better Credit Card Rewards

澳洲幸运5官方开奖结果体彩网:Rewards credit cards offer a variety of useful perks, such as travel points and cash back. The best cards are typically reserved for borrowers with good or excellent credit. If you pay back your credit card balance in full each month, you can avoid interest charges while enjoying rewards on your purꦡchases. 

No Utility Deposits

Utility companies, such as gas, electric, and water companies, may require a security deposit of a few hundred dollars upfront if you have weak credit. A good credit score means you may not have to pay this deposit, which is one fewer expense and item to deal with when you move homes. 

Better Rental Options

A prospective landlord may check your credit when you apply to rent a home. Having a good credit score can show them that you have a history of payi𝕴ng bills on time, which could help them feel more confident that you’ll pay your rent, which can improve your odds of approval. 

Better Chance of Getting Some Jobs

Some employers will ask to check your credit when you apply for a job. A damaged credit history could affect your chances of getting hired. However, 12 states and several other jurisdictions, such as New York City and Washington, D.C. have legislation restricting the way employers can use credit to make hiring decisions.

Frequently Asked Questions (FAQs)

The Bottom Line

From faster loan approval to lower interest rates, there are a variety of 𝄹benefits to having (and maintaining) a good credit score. If you’re looking to improve your score൲, be sure to pay your bills on time and keep your credit utilization ratio low. 

If you have credit accounts in good standing, avoid closing them so as not ꦯto shorten your credit history and potentially increase your credit utilization (unless they have unwanted fees or issues). And when applying for new credit, try to keep your applications to a short window of time to prevent multiple hard credit inquiries from dinging your score. 

If you’re starting from scratch, here’s how to build♌ a good credit score with no credit history.