People used to say "you are what you eat," but a timelier phrase for today's world would be "you are your credit score." No matter what you do for a living or how much of a consumer you are, it is imperative to build and maintain a solid credit score in order to help you obtain the best possible financial advantages. In fact, people who have bad credit can face a long list of other issues, including higher automobile insurance premiums, increased levels of stress and a more difficult job market.
Due to all of these factors, treating your credit like gold is very wise, and it is equally important to properly utilize good credit in order to get ahead in today's economy. To help you make the most of your credit score, we have gathered five tips that will enable you to leverage some of the many perks that are associated with building a solid history as a savvy borrower.
- Save Money with Lower Interest Rates - Individuals who use their available credit lines wisely will build up a solid score that will help them get the best possible interest rates. You can use this to your advantage by remortgaging your house or transferring your balance from a higher interest card. According to BetterMoneyHabits.com, the difference between a credit score of 800 or one of 630 in terms of a $225,000 mortgage can be more than $76,000 in interest. Therefore, if your credit score has improved a lot since you got your mortgage, this could be the prime time to save money by getting a new interest rate.
- Utilize the Best Reward Programs - Many credit cards offer a rewards program that gives you points toward freebies or statement credits. For example, a review of the Pottery Barn credit card indicates that you can receive 1 point per $1, but this only appears to go into effect for purchases of $250 or more. When you consider how many other cards do not have a minimum purchase price restriction in place and offer a lower APR, it makes more sense to go with a better rewards program. People who have good credit are able to take advantage of these distinctions more easily because lenders believe they are highly creditworthy.
- Choose Cash Over Air Miles - It is common for reward programs to offer items such as air miles or gift certificates in exchange for making a purchase. However, air miles take a long time to accumulate, and there are often many restrictions that will prevent you from flying whenever you would like. When you tack on all of the extra fees that cannot be paid for with air miles, it no longer makes good financial sense to go this route. Instead, look for a card that offers cash back on your purchases. This will allow you to maximize your money, and you can even invest everything you earn to boost your savings.
- Negotiate Better Insurance Rates - If your automobile or property insurance provider gives you a policy quote that seems too high, you may be able to negotiate a better deal based on your exemplary credit history. Many companies take this score into account automatically, but several others will keep you at the same discount rate even if your credit has improved. Ask your agent if your current credit score makes you eligible for a better price before you agree to renew your policy.
- Give Your Career a Boost - When you decide to look for a new job, whether in your industry or within a new field, you can take advantage of your high credit score. Although some people question the morality behind such practices, the reality is that the majority of businesses now run a credit check as part of their background search. This means that having good credit will help you look like a better candidate, and it can lead to a more lucrative job offer. If you have good credentials, solid experience and a credit score around 800, you may even be able to negotiate a higher starting salary.
Ultimately, your credit score can have one of the biggest impacts on the quality of your adult life. After all, a high score will lead to better job and financial opportunities, and it can also help you save more money in the long run.