Your credit score is a three-digit number that can either offer opportunity or prevent you from getting more out of life. A higher number will provide greater savings and improve your personal wealth. Luckily, if your credit score is currently poor, it’s not a lifetime sentence. Below are a few ways to improve your score and enjoy the benefits.
Buying a Home
Buying a home is part of the American dream. However, for many people, bad credit prevents affordability. With a poor credit score, you have limited options for acquiring a loan.
To a lender, a poor credit score translates to irresponsible and reckless regarding money. If you can find a lender willing to loan money, the interest rate will be much greater. If you have a good credit score, lenders view you as trustworthy. You can borrow more and gain access to the lowest interest rates. You can plan your move to a preferred location and find a home that suits your needs.
Best Credit Cards
Poor credit makes it nearly impossible to get a credit card. Most times, your only option is applying for a secure credit card. The amount is only a couple of hundred dollars and you provide the funds upfront. This type of credit card offers a way to improve your credit score. People who have excellent credit can apply for cards that offer benefits such as a balance transfer, cashback, rewards in airline miles, and a cash advance credit card. They also have access to the lowest interest rates.
Higher Limits
Because lenders view those with bad credit as a risk, it limits the amount of money you can borrow. A good credit score gives you access to apply for higher credit limits. While there are other factors considered such as earnings and debt-to-income ratio, you improve your chances of getting an approval. Because your credit history shows you pay bills timely, you’re able to borrow more.
Rentals
If you don’t own a home, you’ll need to rent a property. When you have a low credit score, you make it more difficult to secure one. You may find your only option is a rental property offered by the homeowner.
Apartments and most real estate properties use realtors to find high-quality tenants. The first thing they do is pull a credit report. When you have good credit, you select the place you want and then apply with confidence.
Negotiate Rates
Unfortunately, when you have poor credit, you settle. You’re happy just to get an approval on a loan, regardless of the cost. When you have good credit, you come equipped with a bargaining chip. You can negotiate with lenders for lower interest and a higher credit limit. You can pool offers from multiple lenders and then select the one that benefits you the most.
Insurance
Your credit can also play a role in acquiring homeowners and auto insurance. A good credit score puts you in control of the company. Poor credit limits your options.
Most insurance companies now use your credit score the same as lenders. Their view is that if you have poor credit you are more likely to drive recklessly and cause accidents. You’re a greater liability.
Job Search
You earned your degree and are ready to land that dream job. Your credit score will once again come into play. Many companies today use your credit score during the final selection process. A poor score can literally prevent employment.
Security Deposits
Rental properties, utilities, and cable and cell phone service providers all use your credit score to determine whether they need a security deposit. A poor credit score can cost you hundreds extra to secure a home, gas, electric and television. Moving to a new place is not cheap. Having to pay out several hundred more is a tremendous burden to your wallet.
Having good credit improves your chances of getting things like a home, a personal loan, a rental property, and even a job. The good news is there are ways to improve your score and enjoy the benefits.
