Whether you’re buying a new car, applying for a credit card or taking out a line of credit with your bank for home improvements, lenders want to know what the risk is in investing in you. If you have a high FICO score, you’ve done a lot of hard work to get there, and now it’s time to reap the benefits. Our experts weigh in on how having a stellar credit score can save you money.
The FICO score is a standard credit score in the U.S., and is used in more than 90 percent of decisions that involve a loan. Generally, anything above a 700 is considered good, and if you’re above 800, then you have excellent credit. But what does that mean, and how should you take advantage of this ideal three-digit number?
Chances are if you have good credit history, you’ve heard from credit card companies wanting your business. Rosemarie Clancy, editor-in-chief of rewardexpert.com, says one of the most rewarding things you can do is to take advantage of the huge sign-up bonuses out there on credit cards.
Some credit card companies offer thousands of points for customers with the best credit — points that can be traded in for cash or even round-trip flights abroad. “It offers some great earning opportunities to build your points bank, which I consider a vacation piggy bank,” Clancy says.
Low interest rates
Whether you have average credit or excellent credit, you’ll likely be able to purchase a car or house. However, your credit score can mean the difference in either saving or spending thousands of dollars over the life of the loan you take out for that car or home. Higher credit scores typically mean lower interest rates, says Maxine Sweet, Experian‘s vice president of public education.
Financial attorney and debt specialist Leslie Tayne adds that having a good credit score also gives you better bargaining power. “If you have a credit card in the excellent range — over 800 — you have some negotiating power and should not be afraid to contact your credit card and loan lenders to explore opportunities for lowering your interest rates,” she says.
In need of a home repair, or just saw the home of your dreams and want to act fast? If you have a high FICO score, lenders may fast-track your credit application, your according to myFICO. In fact, in today’s high tech world, many credit applications can be approved almost instantly.
Top credit cards
If your credit score is the cream of the crop, you may receive credit card offers that are hard to refuse, Sweet says. Because your credit score is high, you are considered a low risk by companies, and therefore can typically get higher spending limits, lower interest rates and more perks — cards that are only offered to their favorite clients.
We all have everyday bills we have to pay — rent, insurance, utilities. But did you know having a low credit score can actually cost you more in these monthly costs? “You may pay lower security deposits for lease agreements or utility service, and good credit scores may qualify you for lower insurance premiums,” Sweet says.
Thinking about changing phone carriers and want to explore your possibilities? If you have a great credit score, chances are you won’t have any problems — and may not have to pay any up-front fees.
Having a good credit score can mean lower interest rates on loans for school as well. According to FinAid!, the Stafford, Perkins and PLUS loans are not dependent on your credit score, though the PLUS loan requires that the student borrowing not have an “adverse credit history.” However, private lenders generally use FICO scores to determine eligibility.
That’s right — your credit score can even affect your ability to land a job. According to Michigan State University Extension, a credit score can be used as a tool by potential employers to weed out applicants’ employability and might signal an employee’s likely performance on the job.
Do you have great credit? Share some of the perks you’ve encountered with readers below.
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