If you have applied for a car loan or a credit card at any point in time, you may already know the significance of keeping your credit clean. This is especially the case for those of you who are looking to buy other items in the future, and you need the added finance from a loan that you want to borrow. In these cases, if your credit score is poor, your application may be declined right away. Or, the bank or other financial institution may approve your loan at a higher interest rate. Whatever the situation may be, it is very important that you know the actual benefits of keeping a good credit score and history.
Keeping these factors in mind, here are 3 reasons why good credit is important.
1. Saves Money with Lower Interest Rates
If you are applying for a credit card with good credit, you have an advantage in other applications. Not only will you be the first group that will be approved for the credit card that you want, but you will also receive a lower interest rate. The lower interest rates will determine how much you will be required to pay back on the amount that you borrow. Therefore, in the long run, you will be paying less money back than those people who have a bad credit history.
2. Easier to Walk-in for Loan Approval
Whenever you need to borrow a loan or apply for a credit card, you do not want anything to prevent you from securing the things that you want and need at that time. In some cases, the need for the finances may not be extra but crucial to your overall financial survival. Therefore, when you apply for a loan amount that you need, you do not want to jump over extra hoops to secure the money. Fortunately, for those people with a good credit score, the chances are much higher of being approved for the loan simply by walking in and filling out the application. The only barrier to a quick approval in these cases is borrowing a sum that is larger than that they can actually pay back, according to the bank or credit union standard requirements.
3. Better Negotiating Power to Buy Large Purchases at a Lower Cost
If you are thinking about buying a new vehicle, you may want to check the status of your credit score first. If your score is low, you need to look online for the best ways to build credit for free sites. These sites are usually dedicated to working with individuals who need help in raising their scores from poor to good, and they know exactly what the major credit bureaus like Experian Equifax and Transunion are looking for.
As mentioned before, applying for a loan or a credit card can be a bad or good experience based on your present credit score. In some cases, a bad credit score may result in a denial of the loan or a very high-interest rate. However, if you have a good credit score, you can benefit in a number of different ways including saving more money on the cost of the loan, securing a quick approval for a loan when it is needed most and having better-negotiating power when you buy large purchases like a new vehicle.