These are the best pieces of financial advice you can follow. Reduce your debt. Do not spend more than you can afford. You can get instant cash loans from LoanPig.
However, there is another piece of financial wisdom that experts recommend: Keep your credit scores high.
6 Reasons Why You Need A Good Credit Score
Americans often depend on credit to be able to purchase large-scale purchases like a house or car. They also use credit cards to manage their daily spending. Lenders will consider your income, net-to-income ratio and employment history to determine if you’re eligible for such loans.
However, they almost always rely on an automatic evaluation process that considers your credit scores as well as your credit history to determine your ability to repay your debts promptly. These reports are updated frequently with information from credit accounts. Your credit score is a measure of your ability to get loans at the most favourable terms. You will be eligible for loans with lower interest rates, higher dollar amounts and possibly lower fees.
A high credit score can bring many benefits.
1. Considerable Savings On The Interest Rates Of Large-Ticket Loans
If you are looking to finance large purchases like a home or a car, even a small change in the interest rate could result in thousands of dollars over its lifetime. The lowest interest rates are usually available to borrowers with the best credit score for auto loans or mortgages. That can lead to big savings.
2. Lender Products With Better Terms And Availability
Strong credit scores will allow them to get the most credit card and loan products. Lenders will want to lend to these borrowers. They will be better able to compare rates and shop around. They will be able to find the best terms and higher dollar limits to make it easier to finance large purchases.
3. Access To The Best Credit Card Offers
A high credit score will allow you to access the most lucrative credit cards, including those with the lowest rates and the best benefits, such as cashback offers, travel rewards and other incentives. Also, your chances of qualifying for an introductory 0% interest purchase or balance transfer offers are higher. These can help you save significant amounts over time.
4. Insurance Discounts
If you have low credit scores, you won’t be denied insurance. However, having high scores can help you get lower car insurance premiums.
5. More Housing Options
To assess whether potential tenants are financially sound, landlords may look at their credit scores. Higher credit scores are a better indicator of your ability to rent an apartment or house. If you have better credit scores, you could save money on the security deposit.
6. Security Deposit Waivers On Utilities
Your credit score and credit report may be used by utility companies to assess your ability to pay your bills promptly. You may need to deposit if your credit score isn’t strong enough to get utility services.
How Can You Improve Your Credit Scores?
Payroll History: This is usually a significant factor–roughly 30%-35%–in determining the score of most scoring models. Credit scores can be affected by missed or late payments. However, if your credit score is higher if your payments are on time and you have a good track record of paying your bills. To improve your credit scores, the most important thing is to make sure you pay your bills every month. Your scores will increase if you follow a regular pattern of paying all your bills on time. You might set up automatic payments to increase your score over time.
Credit Utilization Ratio (Or Credit Utilization): This measures how much revolving credit are you actively using in comparison to the amount of credit that you have, based on your credit card limits. Higher credit scores are associated with a lower ratio. You should aim to keep your utilization percentage below 30%. But, for the best scores, you will want it to be less than 10%.
Number Of Accounts: Credit scoring models also take into account how many credit cards you have opened and how many balances you have. It’s better not to have balances on more accounts than you have balances on.
Credit History: The majority of scoring models consider how long you’ve been actively using credit. They usually look at the average age for all accounts. Longer credit history will improve your score. You cannot do anything about this except to let the time take its course.
