Your credit score is a three-digit number that expresses your creditworthiness to potential lenders. So having a good credit score should really only matter if you’re actively applying for credit, right?
Wrong.
Your credit score can affect more than just your ability to get a credit card or loan. And the higher it is, the more opportunities it may afford you in life. Having a good credit score is important because…
1. A good credit score could help you get a credit card.
Along with providing you with instant purchasing power and eliminating the need to carry cash, depending on the card, credit cards offer other benefits, including rewards, extended warranties, supplemental rental car insurance, travel insurance, and more.
Don’t care about any of these benefits? Well, try renting a car or hotel room without a credit card. You may be able to do it with a debit card, if the hotel or rental agency will accept one, but otherwise you’re likely going to have to leave a cash deposit. And even if they will take a cash deposit or debit card, some rental car companies may run a credit check on you, which means your credit score could come into play even without a credit card.
2. A good credit score could get you more credit.
“More,” in this instance, means both additional credit and higher credit limits. A higher credit score makes you look more attractive—as in less risky—to potential lenders, so they may be more inclined to grant you credit. And not just credit cards. Your credit score is also a factor in applying for mortgages, auto loans, personal loans, and even student loans. And if you are granted credit, a good credit score could mean a larger loan amount or higher credit limit.
3. A good credit score could get you better interest rates and terms.
Again, a higher credit score makes you more attractive to potential lenders, so they’re more likely to want your business. If you have a good credit score and are extended credit, you may get lower interest rates or be granted better overall terms, such as no annual fee on a credit card or a smaller required down payment on a car loan.
4. A good credit score could help you get a better job.
According to a 2018 National Association of Professional Background Screeners survey, 31% of employers ran credit checks on some applicants, while 16% ran credit checks on all applicants. If it’s legal in your state for a potential employer to check your credit, you must first grant that employer permission in writing.
While employers can’t check your credit score, they do get a look at a modified version of your credit reports. Since your credit score is based on what’s in your credit reports, it stands to reason that, if you have a good credit score, your credit reports should reflect the responsible credit behavior that earned you that score.
5. A good credit score could help you live in the home or apartment you want.
If you apply for a mortgage, your credit score is typically considered by mortgage companies. But it’s not just a factor in home ownership. Many landlords also screen potential tenants with credit checks. Some may only check your credit score, while others may screen you more vigorously, checking your credit reports and perhaps even running criminal background checks, employment verifications, and more.
6. A good credit score could help you drive the car you want.
If you can’t afford to pay for a car in cash, chances are you’re going to need a loan. Unless you’re lucky enough to get a loan from friends or family, most lenders—banks, credit unions, dealership financing departments—are going to check your credit score prior to offering you a loan. The interest rate and terms of your loan will likely be influenced by how high your score is.
7. A good credit score could save you money on car insurance.
Credit scores help some insurance companies make an assessment on your ability to pay premiums—and to determine how likely you are to make a claim. Insurance companies don’t use the same credit score models as mortgage companies or credit card issuers, though. Instead, they use a specialized version of your credit score known as a credit-based insurance score.
8. A good credit score could help you get the partner you want.
A 2017 Bankrate survey found that 42% of Americans said knowing someone’s credit score could be a determining factor in deciding whether or not to date them. And nearly three times as many women as men considered credit score a major determining factor.
We all want someone who accepts us for who they are, but if who you are is a single person with a sub-par credit score, you may want to work on making your credit score more attractive to lenders, and potential suitors, in order to boost your chances of finding—and landing—Mr. or Mrs. Right.
Making consistent, on-time payments to creditors is one of the best ways to help improve your credit score. Need a credit card? See if you Pre-Qualify for a Credit One Bank Platinum Visa in less than a minute.
After realizing he couldn’t pay back his outrageous film school student loans with rejection notices from Hollywood studios, Sean focused his screenwriting skills on scripting corporate videos. Videos led to marketing communications, which led to articles and, before he knew it, Sean was making a living as a writer. He continues to do so today by leveraging his expertise in credit, financial planning, wealth-building, and living your best life for Credit One Bank.
