Good credit can make a number of essential expenses a whole lot cheaper. From better rates on loans to more-affordable car insurance premiums, the rewards of having a credit score above 700 are varied and numerous. If you’re still struggling to build credit, don’t give up. Here are four ways a good credit score will save you money down the road.
Access to the best credit cards
Credit card issuers are eager to sign up customers with high credit scores. Because of the competitive nature of the credit card industry, companies clamor for the business of customers with high credit scores. Good-credit credit cards often offer 0% APR, no annual fees and top-notch perks and rewards. The latter can save you hundreds of dollars a year on airfare, gas and other common expenses. Until you address your credit score, the best credit cards for people with good credit will continue to elude you.
Low interest rates
Lenders will look at your credit report to determine how risky of a borrower you are — and set a loan’s interest rate accordingly. After all, a bank or credit union doesn’t want to lose money if you default on your loan. The higher your credit score, the less risk you represent and the lower your interest rates will be. High interest rates can be especially damaging on decades-long mortgages, costing you tens of thousands of dollars that could have been saved had your credit score been better.
Better car insurance deals
Although California, Hawaii and Massachusetts don’t allow car insurance companies to peek at their potential customers’ credit reports, the majority of Americans will have their credit looked at when they apply for coverage. Although a number of factors — like how many insurance claims you’ve filed in the past — will contribute to the monthly cost of your car insurance, people with low credit scores can generally expect to pay more.
Cheaper cell phone plans
If you have bad credit, finding an affordable cell phone plan can be a stress-inducing experience. In the worst-case scenario, it may be impossible to find one altogether and you could be forced to sign up for a costly pay-as-you-go, no-contract plan. Even with decent credit, you might have to put down a security deposit of anywhere from $400 to $800 when you sign up for a cell phone plan.
This article updated July 8, 2016. It originally published Dec. 18, 2014.