How to Leverage Great Credit Without Borrowing a Dime

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Use your leverage
- Shop your insurances: It’s a good idea to regularly shop for better insurance rates; you can often find identical auto and home coverage for less. When you have great credit, you’ll get even better rates.
- Snag credit card bonuses: The market for rewards credit cards is sizzling, with generous sign-up bonuses and rewards for consumers who can qualify. With a travel credit card, for example, you might be able to use points or miles to pay for a trip if you can meet the card’s minimum spending requirement. It’s not about “churning” cards, or opening accounts to get bonuses and then closing them. It’s about not hesitating to apply for a lucrative card that meets your needs. If the card has an annual fee, make sure you extract more value than you pay.
- Get a HELOC for emergencies: Homeowners can supplement an emergency fund for free by opening a home equity line of credit. The point isn’t to borrow more money with the credit line on your house — instead, leave it unused — but to have it available in case financial tragedy hits. “Everyone who can control their spending should have a HELOC that they can tap in case of an emergency,” said John Eckel, a certified financial planner and financial analyst in Simsbury, Connecticut.
- Lower your interest rates: High credit scores should mean low interest rates. Make sure you’re paying rock-bottom rates for loans, especially big-ticket items like your mortgage and auto loans. If not, you can refinance.
- Get no-interest deals: Paying in full is a solid habit. But if a car dealership is willing to lend you money at 0% because of your great credit, you can take the loan and make monthly payments, while banking the money you were planning to use to pay outright — preferably in an interest-earning account.
- Apply for retailer credit cards: Signing up for a credit card at the checkout counter has risks if you don’t pay in full because interest rates are usually high. But if you’re diligent about paying bills, why not apply for a card to get 15% off a $2,000 furniture purchase? It’s an easy $300. Diligence is key. “Merchants are very good at offering carrots, but you slip up for one microsecond and they bang you over the head,” Goodman said.
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