In the United States, three major credit reporting bureaus set a credit rating for every individual who uses credit cards and other forms of credit. Depending on whether you make timely debt payments, live within your means, and don’t have too much credit card debt at once, your own credit score can rise and fall over time. Let’s take a look at some of the benefits of having a strong credit score.
Lower Your Interest Rates
Your credit rating affects the interest rate that you pay on virtually any loan or credit card. If you have a high credit score, you’ll enjoy relatively low rates on your credit cards. By contrast, a lower credit score makes you look like a riskier bet and may encourage lenders to raise your interest rates, contributing to even more potential credit card debt.
Secure Loan Approval More Easily
In addition to lowering your interest rates, a solid credit rating makes it easier to obtain approval for new credit cards, home loans and auto loans. As a rule, lenders prefer to work with borrowers who have made timely loan payments in the past.
Find Choice Housing
Your mortgage is likely to be the largest loan that you take out during your lifetime, so it’s important to get as good a deal as possible. While every lender is different, borrowers with high credit scores generally receive favorable interest rates on their loans and may enjoy lower down payments. Borrowers with low credit scores and high credit card debt generally pay higher interest rates on their mortgages.
Your credit score may affect your ability to find rental housing as well. Many landlords and management companies won’t accept tenants with low credit scores. Even if they do, they may demand higher security deposits or rent payments.
Improving Your Credit Rating
Because your credit rating isn’t static, you don’t have to worry about permanently bad scores. However, it’s still in your financial interest to maintain or improve your rating over time. If you discover that your credit rating is slipping or feel as if your credit card debt is becoming too difficult to manage, getting help from a trustworthy debt management company like this one can reduce your monthly payments, waive late fees and consolidate your unsecured debts. With the right partner at your side, credit card debt relief can be within your reach.read more