Why Is It Better To Have A Higher Credit Score?

Why Is It Better To Have A Higher Credit Score?

Our credit scores have a huge impact on our overall financial situation, even more so than you may think. Therefore, keeping them in the best condition possible should be a priority in daily life. Many people don’t actually know the benefits and downfalls of having a stronger or weaker credit score. Most of the time, the education surrounding it is pushed away. Unlike many other financial factors within the environment, credit scores are often forgotten about by consumers. There are larger implications that consumers may face on a daily basis, pushing the importance of a credit score to the back of our minds. As lenders, including LoanPig, now offer payday loans to those with poorer credit scores, it is easy to disregard them as a necessity or a factor to highlight and work on. However, there is more to credit scores than just loan acceptance.

What Is A Credit Score?

A credit score is a number produced from your credit report which summarises your relationship with money. This allows lenders to get an immediate idea of your financial situation without having to check your credit report carefully at the beginning. For many lenders, your credit score is the make or break of lending. Having a low score will often dismiss your application immediately without a further chance. However, this will vary depending on the individual lender and their specific rules and regulations. So, along with this, here are a few other benefits of having a higher credit score:

Lower Interest Rates

Your credit score plays a huge role in your financial position. One of the biggest effects it may have is the ability to lower interest rates. No matter what kind of loan you are wishing to borrow, or what credit you apply for, you’ll always encounter interest rates. Interest rates are essentially the cost of borrowing, so they’ll always be present. The aspect which may vary is the percentage you’re charged, and this is determined by numerous factors. A lot of the time, those with higher credit scores will notice themselves finding lower interest rates as a reward.

Easier Approval

Believe it or not, having a higher credit score can actually help you with a variety of things. For example, in relation to rental homes, many landlords will often check your relationship with your finances and any previous mishaps recorded. This way, they’re becoming alert and aware of any potential downfalls and worries you might bring before accepting your request. Whereas, if your credit score demonstrates that your finances have been of significance to the consumer, you will appear much more appealing.

Phone Contracts

According to Statista, over 80% of people have a phone bill that they pay monthly. As we all know, the price of mobile phones is constantly on the rise. Phones have gone from being relatively low, affordable prices to sky-high, expensive prices. Therefore, companies feel safer conducting credit checks to ensure consumers can safely afford the phone or the contract they’re borrowing. So, before any factors are made final, you will need to pass a credit check to prove your safety and reliability to the lender. If this test is not complete the lender will simply decline your request.