If you’re reading this you might be on the hunt for a good credit score. You might even be pondering what a good credit score even means. What’s that magic number?
And in a way, a good credit score does magic. Look at it like as a way to get what you want faster and more efficiently. For example, do you need to lease a car? A good credit score will get you one with a lower down payment, plus the possibility of getting a much more luxurious brand. It can also get you larger loans for your business or home. In a nutshell, your credit score represents how reliable you are when it comes to borrowing money and how well, or poorly, you manage your debt. So here’s the deal: it’s imperative, especially for potential business owners, to have a good credit score.
But what is considered a good credit score?
One of the most well-known types of credit scores is the FICO Score, created by the Fair Isaac Corporation. Personal FICO scores range from 300 to 850. Generally, a FICO Score above 670 is considered a good credit score and a score above 800 is considered to be excellent.
If you don’t know your credit score, we highly recommend you to check it ASAP. Request your credit report today. It’s fast and most importantly, free. And if you’re very confused about how to analyze it, we got you covered with this guide.
If you’ve already requested your credit report and are fully aware you don’t have a good credit score, there are plenty of ways to improve it and in just a short amount of time. Plus, find out what habits you are cultivating that are negatively impacting your credit score so you can fix them.
Benefits of having a good credit score
Better chances to be approved for a loan or credit card
Now, let’s get to the nitty-gritty. To borrow money — for whatever it is — lenders need to know that you can pay it off. That’s where a good credit score comes in. When lenders, credit card companies, and even car dealerships make a decision on the approval of any type of credit or loan — mortgage, auto, credit card, and others — they take into account your credit score.
Better terms and lower rates on loans and credit cards
Let’s say you have a 700 FICO score and you’re looking to purchase a home. This puts you (and your credit) in a great position to place an offer because a good credit score will lower your interest rate and down payment in most cases. Alternatively, if you have a score that’s in the 400’s, you will be coughing up a lot more upfront (down payment) and on interest in the future. Therefore, your credit score definitely does have a significant impact on the money you have on a daily basis, or, in other words, in your cost of living.
As a business owner, your credit score will determine your potential business loan. Not only whether you are approved or not, but also the amount of the loan, the interest rates, and other factors. Read this post if you are wondering how exactly credit score and business loan rates are related, and what rate you will get according to your credit score.
If that was not enough for you to go online and check your FICO score asap to measure your credit score, then consider these other reasons below to have a good credit score.
Better deals from your suppliers
Take for example negotiating better deals with your suppliers. It’s always beneficial to show off your credit history depicting how much and how fast you’ve been able to repay loans and debts. Or, for getting better terms when you negotiate cable and internet rate. By pointing out your good credit score, you can avoid late fees or even lower or eliminate security payments.
Better car insurance premiums
It gets better: good credit score also helps when negotiating car insurance premiums. Insurance scores are numerical scores created by insurers to predict the likelihood that you’ll have an accident or fill out a claim. The scores are calculated from information on your credit reports. Car insurers also use auto insurance scores as one of many factors to determine how much you’ll pay for car insurance. When calculating your insurance scores, insurers generally look at the length of your credit history, a number of accounts in good standing, payment history, credit utilization rate, collections accounts and recent applications for credit.
Better chances to be approved in rentals
It’s not always the case, but sometimes landlords use credit scores to screen their potential tenants. A bad credit score, especially if it’s caused by a previous eviction or outstanding rental balance, can significantly lower your chances of renting the apartment or your choice.
No security deposit when you get a cell phone contract
Some cell phone service providers may not give you a contract if you have bad credit, forcing you to choose a pay-as-you-go plan that can be more expensive, especially if you’re a business owner always on the phone. People with good credit don’t have to pay a security deposit and can get great discounts on the latest phones.
No security deposit on utilities
Some electricity companies and water suppliers require to pay a deposit of up to $200. This is a huge inconvenience when you’re relocating. Even if you are not moving, you could want to change your utility plan for other reasons. A good credit score means simply you won’t have to pay a security deposit.
You’ll look better when you’re applying for a job
Lastly — and even is it doesn’t always occur — employers sometimes check credit score to get a better overview of a potential hire. It can help them gauge whether you are more likely for theft or fraud, any evidence of mishandling your own finances and how responsible you are. Now, we all know a good credit score really doesn’t have much of a say on character per se, but it can give employers some facts about your payment history. Don’t fret: they don’t access your credit score, but instead, see a modified version of your credit report. The report employers can access will only show your payment record, the amount you owe and your available credit.
You’ll save money in general
Finally, the difference between a good and an excellent credit score can save you thousands of dollars in the long run. Check your personal credit report often and find those areas that are affecting your credit score, so you can consider the best ways to improve it.
Remember that as a business owner, a good credit score will allow you to get better terms of your potential business loan. So if you’ve thought long enough, go ahead and apply for a business loan with Camino Financial. Submitting your application will take only minutes and it won’t affect your credit or lower your credit score. When applying, Camino Financial does a soft pull on your credit that will not affect your credit score. We hope you’re well on your way to an excellent credit score and a thriving business!