9 Benefits of Having Good Credit

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Illustration showing the benefits of a good credit score

The Balance / Chloe Giroux

You can survive with bad credit, but it’s not always easy and it's definitely not cheap. Establishing a good credit score (generally defined as a FICO score of at least 670 or a VantageScore of at least 661) will help you save money and make your financial life much easier. 

If you’re looking for reasons to maintain your good credit, here are some great benefits to consider.

Good-Credit Benefits

  1. Lower interest rates on credit cards and loans
  2. Better chance for credit card and loan approval
  3. More negotiating power
  4. Better chance of approval for higher borrowing limits
  5. Easier approval by landlords
  6. Better car insurance rates
  7. Cellphone contracts without a security deposit
  8. Utility hookups without a security deposit
  9. Bragging rights

1. Lower Interest Rates on Credit Cards and Loans

Interest is one of the costs you pay for borrowing money, and the interest rate you get is often directly tied to your credit score. If you have a good credit score, you have a much better chance of qualifying for the best interest rates, which means you’ll pay lower finance charges on credit card balances and loans. The less you pay in interest, the sooner you'll pay off the debt, and the more money you'll have for other expenses. 

2. Better Chance for Credit Card and Loan Approval

Borrowers with a poor credit history often avoid applying for a new credit card or loan, because they've been turned down previously. Having an excellent credit score doesn’t guarantee approval, because lenders still consider other factors such as your income and debt. However, a good credit score increases your chances of being approved for new credit. In other words, you can apply for a loan or credit card with more confidence.

3. More Negotiating Power

If you're not already getting the best interest rates, a good credit score gives you leverage to negotiate a lower rate on a credit card or a new loan. You should have more offers and providers to choose from, which can give you you more bargaining power. However, if you have a low credit score, creditors are unlikely to budge on loan terms, and you won't have other credit offers or options. 

4. Better Chance of Approval for Higher Borrowing Limits

Your borrowing capacity is based on your income and your credit score. One of the benefits of having a good credit score is that banks are willing to let you borrow more money because you’ve demonstrated that you pay back what you borrow on time. You may still get approved for some loans with a bad credit score, but the amount will be more limited.

5. Easier Approval by Landlords

Most landlords use credit scores as part of their tenant screening process. A bad credit score, especially if it’s caused by a previous eviction or outstanding rental balance, can severely damage your chances of getting into an apartment. A good credit score saves you the time and hassle of finding a landlord who will approve renters with damaged credit. 

6. Better Car Insurance Rates

Add auto insurers to the list of companies that will use a bad credit score against you. Insurance companies use information from your credit report and insurance history to develop your insurance risk score. They often penalize people who have low credit scores by giving them higher insurance premiums. With a good credit score, you’ll typically pay less for insurance than similar applicants with lower credit scores.

7. Cellphone Contracts Without Security Deposits

Another drawback of having a bad credit score is that cellphone service providers may not give you a contract. Instead, you may have to choose one of those pay-as-you-go plans that have more expensive phones—or pay for a phone outright up front.

At a minimum, you might have to pay extra on your contract until you've established yourself with the provider. People with good credit avoid paying a security deposit and may receive a discounted purchase price on the latest phones by signing a contract.

8. Utility Hookups Without Security Deposits

Because you are usually billed for utilities such as gas, electricity, and water at the end of the month, utility companies want to know that you'll be good for the payment. That's why they often check your credit history. If you're a customer with bad credit, that may mean you're more likely to be charged a security deposit.

Security deposits are sometimes $100 to $200 and a huge inconvenience when you’re relocating. You may not be planning to move soon, but a natural disaster or an unforeseen circumstance could change your plans. A good credit score means you're less likely to have to pay a security deposit when you establish utility service in your name or transfer service to another location.

9. Bragging Rights

Because of all the benefits, a good credit score is something to be proud of, especially if you've had to work hard to take your credit score from bad to good. If you've never had to experience a bad credit score, keep doing what it takes to maintain your good score. It only takes a few missed payments to start getting off track.

Frequently Asked Questions (FAQs)

What is a good credit score?

There are actually many different credit scores for different types of borrowing. For instance, mortgage lenders may look at one type of FICO score and credit card issuers a different one. But the general point ranges for FICO scores are:

  • 670-739 Good
  • 740-799 Very Good
  • 800+ Exceptional

For VantageScore, they're:

  • 661-780 Prime
  • 781-850 Superprime

How do you get a good credit score?

The most important things you can do to get a good credit score are pay your bills on time every time, and keep your credit utilization ratio (the amount of your balances compared to your total credit limits) low—below 30% for sure, but the lower, the better.

Other factors that impact your score are the length of your credit history, new credit applications, and your credit mix.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. VantageScore. "The Complete Guide to Your VantageScore."

  2. myFICO. "What Is a Credit Score?"

  3. myFICO. "How Lenders Use Fico Scores in Credit Checks."

  4. U.S. Department of Housing and Urban Development. "Renter's Guide: Ten Tips for Tenants."

  5. FICO Insurance Scores. "Credit Scores vs. Insurance Scores."

  6. Federal Trade Commission. "Utility Services."

  7. FICO. "What's in My FICO Scores?"

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