Frugal Living

5 Benefits of Having an Excellent Credit Score

Loans are a necessary part of life for the vast majority of people, but to access them, you will need an excellent credit score. With this in mind, I thought I would reveal some of the benefits of having a brilliant credit rating – and suggest some ideas of how to improve your current score.

You can get a home loan

Given that you are reading a blog about frugal living, I would like to think you avoid debt as much as possible. But, let’s face it – not all debt is bad. Debt gives us the opportunity to buy a home, via a mortgage, for example. The trouble is, you can’t access the best home loan offers – or even buy a home – if you have a poor credit rating. If you are looking to buy your first home in the next year or so, make sure your credit score is nothing short of excellent – you will find it much easier to find a good mortgage.

You can rent a home

Having a good credit score doesn’t just enable you to get a mortgage – it’s also important if you want to rent a home. Landlords are starting to check credit ratings as standard practice, and if you fail their rating system, you might struggle to get a tenancy. If you need to move home in the foreseeable future, make sure you start repairing any damage to your credit rating sooner rather than later. You can use credit cards to build credit, for example, and you should also focus on paying off your bad debts.

You can buy a car

Cars are another necessary part of life for the average American – and they can be the biggest investment you make, after your home. If you want to get a better deal on a new car, you will need an excellent credit score. Lenders reward low-risk borrowers with better interest rates for everything, and it can save you a significant amount of money in the long-term.

You can get a loan for your business

More people than ever are starting a businesses – it’s easier than ever, thanks to the Internet. The problem is that all companies need funding to survive and grow, and in those early days when cash flow is restricted, you may need a loan to help you out. You will need to bear in mind that your personal credit score will be taken into account when applying for business loans, so a good credit score is essential.

You can get a job

Just as landlords are checking reference agencies before renting out properties, so employers are running checks before employing people. Again, it’s a growing trend, and good credit references could be the difference between you getting a job, or facing unemployment. It’s harsh – but you need to be aware that it is happening with more regularity than ever before.

As you can see, there is a multitude of benefits of being a sensible borrower and having a good credit score. While it is always important to remain frugal, when you do borrow money, make sure you play by the rules. The consequences if you don’t can be incredibly serious.

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