Good credit is essential to long-term financial health and credit flexibility. A solid FICO score means the difference between paying reasonable interest rates and struggling to pay sky-high interest rates that feel suffocating. Let’s take a closer look at how having a good credit score (650 and up) saves you money on mortgage, car loans, and credit cards.
“Having a good credit score (650 and up) saves you money on mortgage, car loans, and credit cards.”
Almost anyone can get a line of credit—there are subprime mortgages, high interest rate credit cards, and private/dealer financing for vehicles. But having a good credit score means that you get access to some of the best deals lenders offer. For example, credit card lenders typically fight over borrowers with FICO scores over 700 by offering 0% APR and no annual fees. They may also throw in perks such as discounted car rentals and free gifts. Armed with good credit you’re also less likely to tangle with unscrupulous lenders trying to rob you blind and take advantage. All of these benefits can save you hundreds of dollars a year.
Lower Interest Rates
One of the most obvious benefits of a good FICO score is that you get access to credit with a lower interest rate. However, what many borrowers don’t realize is that even one single point can mean the difference between paying $200 extra dollars a month on a mortgage and putting $200 in the bank. For example, if you took out a $200,000 30-year mortgage at 3% interest, you would pay $954.83 per month, but if you paid 4% interest you would pay $1,073.64 per month. That’s a lot of money wasted. Just improving your credit score slightly could save you a significant amount of cash on your mortgage.
Simply put, bad credit could mean higher insurance costs for your vehicle and home. By improving your credit score, you make a better impression and improve your odds of lowering your insurance rates.
If you want to get the best credit deals available and save money, take the time to make your FICO score the best it can be.