Improving Your Credit Score Really Is Worth the Effort: Here’s Why
Having a bad credit score isn’t the end of the world, but it’s not a good position to be in. For one, it’s not always easy and it certainly doesn’t come cheap.
On the other hand, a good credit score will help save money and make life more comfortable for you. Many people graduate from university with student debt, but are still able to manage their cash flow and get a good credit score. It all boils down to discipline and smart money practice.
If you need some reasons to improve your credit score here are a few:
- Low interest rates on credit card and loans
An interest rate is one of the costs of borrowing money, and almost always, it is directly proportional to your credit score. If your credit score is good, you’ll automatically qualify for an excellent interest rate. This means your finance charges on credit card balances and loans will also be lower. The less costs you incur on interests, the more you save for other needs including balance repayments.
- Better car insurance rates
Motor insurance is a must-have for every British citizen and car insurers use your credit score to determine how eligible you are for a loan. Experts say that people with poor credit scores are more likely to file more claims and they tend to be charged higher insurance premiums. A high credit score guarantees you lower insurance premiums than applicants with low credit score.
- Better negotiating power
A good credit score gives you advantage in any financial negotiation. You could use it to get a lower interest rate on a new loan or credit card. You can refer to great offers you have got from other companies based on your good credit score, and it will put you in a better negotiating position. A low credit score on the other hand will has no effect on creditors and you’ll be at a disadvantage. In fact, you’ll not have the freedom to check multiple options.
- Getting approval for higher limits
Banks like a borrower with a good credit record and score. Your borrowing capacity is often dependent on these factors. If you have demonstrated a good track record of delivering on your loans in the past, you are likely to get an approval if you need a higher limit. This gives you the financial freedom to go for that dream house or business plan you have been thinking about.
There are other benefits that could come from a good loan position, such as easier approvals for mortgage application, little or no security deposits on utilities and bragging rights. As long as you maintain you’re a good cash flow practice, you should be on top of your credit situation.