Credit Cards

With all the media attention focused on raising and improving your credit rating, everyone at this point knows it’s important and something that needs to be raised. In fact, I’d be willing to bet that you can find more information online on how to raise your credit score than information about what a credit score is or means.

There is an inherent problem in trying to achieve something (a high credit score) while not understanding the importance or significance of the achievement. First off, there is not much of an incentive to get a high credit score if you don’t understand the perks of a high score. Secondly, even if you do achieve a high credit score you might not be reaping the full benefits of that score. While a lot of the benefits some inherently, some of it is an added negotiation power (which I will get into below).

The Benefits of a Good Credit Score

Lower Interest Rates
Some of the most commonly known benefits of a good credit score are the lower interest rates, which can be compared at online sites such as Money Supermarket. Whether for home loans, car loans, or credit cards, you will experience lower interest rates (and higher credit limits) if you have a higher credit score. These lower rates translate directly into savings over time, particularly for higher loans over longer periods of payment, like a 30 year $300,000 mortgage.

Negotiation Power
If you have a high credit rating, creditors will not want to lose you as a customer. Particularly if you are receiving low-rate credit card offers from their competitors, you should give your creditor a call and notify them about the low-rate offers you’ve been receiving. Ask if they can do anything about that, and odds are they will lower your rates. You can also use the amount of years you’ve been a customer, your recent number of consecutive on-time payments, and your credit score as leverage in your argument for lower rates. Don’t be afraid to threaten to switch to a competitor with lower rates, and do consider switching if your creditor doesn’t lower your rates competitively.

Job Offers
Believe it or not, potential employers often pull credit reports as a way to assess job candidates. The idea behind this is that the employer now has a quantifiable record of your fiscal responsibility and reliability, and this often translates into work ethic. Not to mention, people without financial troubles have less to worry about and can focus more on their work. Of course, this assessment isn’t 100% bullet-proof, but it is something that employers can access which gives you all the more reason to raise your credit rating.

For home and auto insurers, your credit score definitely comes under consideration when deciding whether coverage will be offered and at what premium. The reasoning is not too different from the reason employers check credit scores: People with higher credit scores were in direct correlation with fewer claims.

Utility Service
Having a good credit score can even save you money on your utilities. Companies that service gas, electricity, cable, and/or phones often waive deposits and even offer better plans. The logic behind this is extremely linear: If someone pays their creditors on time, they are likely to pay their utility bills as well. Utility companies like customers who pay on time.

Author Bio:
Stella Walker is a freelance writer of credit score guide where she writes about topics including credit, debt, investment, bankruptcy.