Good Credit and Why Do We Need It
Good credit is a classification for an individual’s credit history, including the borrower, has a relatively high credit score, and is a safe credit risk. The credit scores are given by credit reporting agencies. Creditors check credit scores to provide credit decision and background check details.
These credit rating agencies assign debtors a score based on their credit history, which can be tracked in a credit report. We can survive with bad credit, but it’s not always easy and not cheap. Establishing a good credit score will help you save money and make your financial life much easier, but if we want to look for some reason to have a good credit score then the following are some justifiable reasons why we need a good credit score.
Low-interest rates on credit cards and loans
The interest rate is one of the costs you pay for borrowing money and the interest rate is often directly tied to your credit score. If you have a good credit score, you will almost every time qualify for the best rate interest rates, and you will pay lower finance charges on credit cards and loans. The less you pay as interest, the sooner you will pay the debt, and then the more money you will have.
More negotiating power
Good credit gives you the leverage to negotiate a lower interest rate on a credit card or a new loan. If you need more bargaining power, you can take advantage of other attractive offers that you’ve received from other companies based on having good credit. However, if you have a low credit score, creditors are unlikely to budge on loan terms, and you won’t have other credit options as well.
Avoid Security Deposits and extra security checks
Security deposits are some minimalistic amounts but which have a huge inconvenience when you are relocating. You may not be planning to move shortly, but a natural calamity or an unforeseen circumstance could change plans. A good credit score means you won’t have to pay a security deposit when you establish a utility service in your name or transfer service to another location.
Bragging Rights
Because of all the benefits, good credit is something to feel proud of, especially if we have to work hard to take our credit score from bad to good. If you have never experienced a bad credit score, keep doing what it takes to maintain your good credit score high as you can. It only takes a few mismanaged payments to start creating problems.
Building good credit is just a start, but sustaining it will help you continue to take advantage of having good credit. You keep practicing the credit habits that helped you earn a good credit score. Keeping your credit score high is easier than building credit.
If your FICO score is over 670, you have a good credit score. It is very important to understand how your credit habits might be helping or hurting your credit score. when you know how to get a good credit score, it becomes easy to take advantage of financial opportunities related to good credit.