Having great credit takes years to work up to with a solid payment history while carrying minimal debt, so why not get rewarded for your hard work. Credit is the major factor in a loan decision, not only could it make or break the deal, but if your credit is less than excellent, then you could be paying astronomical amounts of interest, and for large purchases like a mortgage, that could be hundreds of dollars extra a month in just interest! Not only do you need to improve your credit score for your own expenses, you also get to take part in the perks for having a better credit score.
Interest Rates
This is the most important, because as mentioned, you could be paying hundreds of dollars a month extra on only interest each month compared to those with great credit. If you have a $150,000 mortgage and are paying even 1% interest higher than those that were approved at over 3%, over a 30-year mortgage you could be paying $35,000 additional during the life of the loan.
Higher Credit Limits
Those with great credit will not have a low cap on what they are able to spend each month, as the credit company will want purchases to continue to be made. If you continue to pay off your balance each month and make payments on time, you will see your credit limit continue to rise.
Better Car Insurance Rates
Some may be surprised that your credit score has a factor into whether or not you are insurable, but although it does not have to do with your accident record, it does paint a picture to the lender to decide if you are a responsible borrower, and if you have defaulted on anything in the past, chances are you will not have an issue paying your insurance premium or be a reckless driver.
Rewards Cards
Lenders will approve you to have rewards cards which provide cash back, points, or airline miles, for example, to those that use the card for purchases. The new Costco Citi card will have up to 4% cash back, which is huge, so why not receive a check every year just for using the card each month. Credit limits are higher as well to allow for most or your monthly expenses to be put on the card, so as long as you are disciplined enough to pay off the balance each month, this is a great perk.
Great post. A good credit score in my opinion, should be considered part of an early retirement strategy. Maintaining good credit save tens to hundreds of thousands of dollars in a lifetime.
My Wife and I were recently able to obtain higher credit limits due to our good credit scores. Over the last couple months, Chase and AMEX have raised (upon request) our credit limits by a combined $11,200. Not needed since we pay our balances off every month, but the heightened limits should help improve our credit scores even further.