Benefits Of A Good Credit Score

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It’s all over the news, every day, about the mortgage crisis, and bad credit risks. What you might not know is that the average American actually has good credit, their score being somewhere in the range between 720 to 740. It is a little daunting to try to make good credit out of bad, but it’s worth the hassle because of the benefits. Going for a loan only to find out that you’re considered a bad credit risk can be avoided by getting your credit report first, cleaning up any messes, and going in forearmed. What are the benefits of a good credit score, and why should you perhaps strive to make your credit score better?

For one thing, it saves you money. If you are getting credit from someone who sees that your credit score is good, they’ll assume that a) you know how to manage your money and will pay them back promptly and b) you’ll pay them back in full, as promised. It’s as much a measure of trust to a creditor as anything else. The money savings comes with the fact that most creditors will reward your financial diligence ...
... with lower interest rates, which means lower monthly payments for you.

Another benefit comes from the fact that if you show up on a quick computer check as a good risk, (with a good credit score) then you’ll have less of a wait for credit decisions. You won’t be asked for supplemental paperwork proving you’re worthy of a loan, because you don’t have black marks on your credit report. No late payments, no defaults, no evictions for lack of payments…your credit report shows you to be of good character and responsible enough to handle the responsibility and obligation of an interest-bearing loan. You won’t have to wait for income verification, or get letters of recommendation to show your potential creditor. They take much of what they see just in a credit score at face value, speeding up credit decisions.

A great benefit of good credit is that it allows you to be a discerning shopper. If you’re in the market for a major purchase and you don’t like the rate one lender is offering, you have the option of either staying with that lender but working them down to a more reasonable rate, or you move on. You can shop around for better fees and rates with the power of a good credit score behind you. Lenders are happy to lend to someone who is shown to be trustworthy, and your good credit rating will have them be more accommodating to you than to someone whose past credit dealings are less than stellar. You are a better risk to the lending institution, making them more comfortable that they’ll not only get paid back, but get paid back on time. They don’t make any money off someone who just drops the payments, house, car, boat or business loan and moves away.