Advantages of Credit and the Benefits of Building Good Credit

This article will help explain why good credit is essential to have in a variety of situations. It will also advise on how to access your credit report and improve your credit rating if needed.

What Does “Credit” Mean Exactly?

- A monetary amount that a creditor agrees to extend to a borrower. - An indicator of whether or not a borrower is likely to repay a loan on time (i.e., having “good credit” or “bad credit”). - An amount a borrower can borrow if they choose, like having a credit limit on a credit card or a line of credit on a business or home.

What are the Benefits of Good Credit?

1. Best Loan Terms

This rationale serves as the most important reason to build good credit. Those with excellent credit typically qualify for the best loan terms. Meaning, if you have good credit, you will generally receive lower interest rates than someone with bad credit.

What are the Benefits of Good Credit?

2. Qualify for Better Credit Cards

Not all credit cards are created equally. You must have good or excellent credit to qualify for the best credit cards, like travel rewards cards or other elite cards.

What are the Benefits of Good Credit?

3. Apartment Hunting

When you apply to rent an apartment, it’s common for landlords to run your credit report. After all, they want to make sure you’ll pay the rent on time.

What are the Benefits of Good Credit?

4. No Deposits Needed for a Utility Company

If you have a good credit score, you can often set up your utilities without making a deposit. This is nice, as you get to keep your cash in your pocket.

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