The Hidden Perks of Great Credit

Everybody knows it’s important to keep your credit in good shape. Not only is a healthy credit score a good financial practice, but it’s also a way to save money and increase your housing options in some cases.

The information I’m providing you this month explores all the hidden perks that accompany great credit, so you understand exactly what that good-to-excellent credit rating can get you. I’m also sharing tips to help you build the strong credit you need to take advantage of these benefits, while clearing up a few misconceptions about how a credit score is actually calculated.

Building excellent credit now will prepare you as you apply for a new credit card, auto loan or mortgage in the future. If you’re in the market for a new home now, give me a call! I can walk you through the process and refer you to a great lender who can get you pre-qualified.

THE HIDDEN PERKS OF GREAT CREDIT

Your credit score is your track record of financial responsibility. Maintaining excellent credit comes with several perks, including a few that may suprise you!

EASIER TO BUY A HOME

You're more likely to get approved for a mortgage when your credit is strong. This increases your purchasing power in a market where record low interest rates have already made many homes easier to afford.

LOWER INTEREST RATES ON HOMES

A good or excellent credit score earns you a lower interest rate on most loans and gives you the power to negotiate other elements, like a better repayment plan or higher principal.

DISCOUNTS ON CAR INSURANCE

Insurance companies won't turn you away for bad credit, but they may raise rates. Maintaining good credit could lower your monthly premium.

GET A BETTER PHONE PLAN

Excellent credit can determine whether your wireless carrier grants you a contract with potential discounts or a costly month-to-month plan that often requires a security deposit.

SECURE THE BEST CREDIT CARDS

If your credit is in a good place, you could qualify for credit cards with excellent incentives adn benefits. You may also land a higher credit limit if you've been proven to pay your bills on time.

MORE OPTIONS FOR RENTERS

Good credit shows landlords you are responsible, which can potentially lower your security deposit as well as any fees required up front.

TIPS FOR BUILDING EXCELLENT CREDIT

PAY ON TIME
Payment history is the largest part of your FICO^® score at 35% so pay bills on time to keep your score high.

KEEP BALANCES LOW
Aim to use less than 30% of your credit limit.

PAY ATTENTION TO YOUR SCORE
Monitor your credit score regularly to know where you stand. If it's lower than you thought, consider running your credit report to check for possible errors.

BE PATIENT

While negative credit information is frustrating, it typically ages off your credit report after a few years, depending on the situation.

SHOP SMART

Do research before applying for loans or credit cards to avoid unnecessary hard inquiries that may lower your credit score.

Common credit misconceptions

Closing my unused credit card account will help my score.

Keeping old cards can boost your credit amount and credit history, which may improve your score.

Checking my own credit score lowers it.

This is a soft inquiry that shouldn't affect your score.

Any debt will hurt my credit score.

Not all debt is bad. For example, paying the mortgage on time can raise yoru score. Excessive credit card debt, however, can lower it.

GET A FREE CREDIT REPORT: Everyone gets one free credit report per year. Access yours at annualcreditreport.com

GET YOUR CREDIT SCORE FOR FREE: Credit Karma, Credit Sesame, Credit.com, Mint