If we understand when a good credit score is, we can get a better deal on a car loan and a mortgage loan. However, there are everyday situations where having a good or great credit score can save you money on a regular basis. Here are the top five times when a good credit score can save you money.
5 Times When A Good Credit Score Will Save You Money
1. Your Automobile Insurance
What many people do not realize is, when you purchase auto insurance, the insurer will run your credit report. In addition to calculations made for where your vehicle is stored or how many miles you travel on an annual basis, your credit score may play a role in your auto insurance rate. Keeping your credit score high can help you save money on your premium whether you pay on a monthly basis or you pay an annual lump sum. If you do pay your premium on a monthly or quarterly basis, you may be able to get the insurance company to waive any handling fees if you have a good credit score.
2. Apartment Rental Deposits and Mortgage Payments
Landlords generally request a security deposit and may ask you to pay your last month’s rent upfront before moving into a new apartment. Today, nearly all landlords will ask new tenants to authorize them to pull your credit report before offering you an apartment for lease. Not only could a better credit report improve your chances of getting the apartment of your dreams, but your landlord may be willing to waive the up-front requirement of the last month’s rent amount if they feel you are a good credit risk.
If you currently own your home and you are planning to stay in your home for several more years, you should consider reviewing current interest rates versus what you are paying now. If your credit score has improved since you took out your mortgage, you may qualify for a home mortgage refinance with a lower interest rate. In addition to a lower interest rate, you could be paying less on your monthly mortgage payments thanks to having built up equity in your home.
3. Cell Phone Packages
If you are considering changing cell phone carriers, check your credit report first. Unless you are using a prepaid plan, carriers will check your credit before agreeing to a new cell phone contract. The higher your credit score, the better the deal you will qualify for. This includes pricing on a new cell phone.
If your credit score is low, cell phone carriers may reject your application for new service, or you may be required to put down a larger deposit on a new smartphone. If you are financing your new telephone, you may qualify for better financing terms if you have a good credit score. Not only will you be able to take advantage of better cell phone plans, but you may also qualify for a better cell phone.
4. Credit Card Payments
Credit card rates can vary depending on numerous factors. However, if you have a good credit score, not only will you qualify for lower rates, but you may also be able to take advantage of no interest rate balance transfers. No interest rate balance transfers are usually offered to consumers who have the highest credit scores. This allows you to transfer balances from high-interest rate cards and enjoy an introductory period where no interest accrues on your balance. This can save you money immediately and allow you to raise your credit score further since it often means your credit utilization will also decrease.
Keep in mind that if you have a good credit score, you may also qualify for credit cards with higher credit limits and additional perks. Perks can include travel miles, cash back, and other features that can save you money immediately and over time. However, be sure to read all terms and conditions before you decide to transfer your balances.
5. Refinancing Student Loans
Another commonly overlooked way to save money is to consider refinancing your student loans. You can consolidate your student loans by taking advantage of lower interest rates on a new student loan, or you can elect to apply for a home equity loan or personal loan at a lower interest rate. Not only will this result in immediate savings, but, over time, you will also save more money on the repayment of your student loans.
If you have worked hard to build your credit score, or you are in the process of rebuilding your credit, it can be motivating to understand the various ways a good credit score saves money. If you are currently rebuilding your credit, make sure you take advantage of the new opportunities an improved score presents you. You will be able to save more money on a monthly basis and save thousands of dollars over the life of your existing loans.