Updated on July 8, 2016
Granted, it is possible to live with bad. However, what most people can attest to is the fact that having bad credit is in no way cheap or a luxury. It is, bluntly put, a great source of immense stress not to mention the many occasions of missed opportunities. Other than receiving second class treatment when it comes to getting access to credit, having bad credit can seriously injure your reputation, make you feel embarrassed and deny you access to basic credit facilities. For this reason, emphasis has always been on the need for people to strive towards having a good credit rating.
The peace of mind that comes with having a good credit rating is unlike any other. You feel liberated, confident and inadvertently lead a stress free life. If you are the kind of person who is not bothered by the status of your credit rating, you might want to take a look at the benefits of having a good credit rating. Why is it important to have a good credit score? What are some of the underlying benefits of having a good credit score?
Low interest rates on loans and credit cards
The moment you have bad credit, you can be rest assured that lenders view you as a risk and for that reasons, you will have to bore the brunt of high interest rates every time you apply for a loan or a credit card. In simple terms, interest rates refer to the cost of borrowing. The higher the risk to the borrower, the higher the interest rates. Having good credit rating means that you get to enjoy low interest rates on loans and credit cards as lenders view you favorably. The less the amount of money you pay as interest rates, the more money you save to channel on other important financial endeavors not to forget repaying your outstanding loan balance.
If you have never been in a situation where you have bad credit and in need of an urgent loan, you might not fully comprehend the importance of having a good credit score. Having bad credit is a nightmare especially when seeking to get approved for a loan. Rejections become the order of the day and a person does not have guarantee of approval. However, the tune changes when you have a good credit rating as most lenders do not hesitate to approve you for a loan. As such, having a good credit rating means that you have a better chance of getting approved for a loan or credit card application.
Higher borrowing capacity
+One of the best things about having a good credit rating is the fact that financial lenders are more than willing to let you borrow money because you have been tried and tested and you have proved beyond any reasonable doubt that you are capable of repaying your loan on time. Who wouldn’t want that? Having a good credit score gives you freedom and peace of mind in the knowledge that you have access to higher borrowing limits.
Access to a phone contract with no need for security deposit
Getting approved for a simple phone contract becomes a herculean and daunting task especially when you have bad credit. In fact, most UK providers require that individuals with bad credit pay a security deposit or provide a guarantor before being approved for a phone contract. Of course, this is embarrassing not to mention a great source of stress. The same cannot be said of a person with a good credit rating. It becomes relatively easy and simple to get approved for a cell phone contract with no need to pay security deposit upfront.
When you have a good credit score, you gain more negotiating power and as such most of the time you end with low interest rates as compared to those with a poor credit rating. You negotiate from a position of advantage and as a result you are able to receive great offers from different lenders without breaking a sweat.
To sum it up, everyone should aim to have a good credit rating. apart from the above benefits a person will also benefit from increased credit card limits, better insurance rates, bragging rights just to mention but a few.