What Can You Do With A Good Credit Score? – 7 Perks

Spread the wealth!

Many of you have probably heard financial professionals out there, like Dave Ramsey, talk about why credit cards and credit scores are one of the worst things invented for humanity. They tell you that you should just stay away from them because you don’t need them. But people like him never take a moment to explain, what can you do with a good credit score?

They’ll tell you that financial success does not require you to worry about credit or a credit score. While this may be true, let’s take a moment to also consider this: will it hurt those who know how to manage it correctly?

The answer is a resounding NO.

In fact, knowing how to manage your credit correctly and having a good credit score can actually speed up your journey to financial freedom.

You might be asking, “but how can having debt (credit is debt) help me achieve financial success? Wouldn’t financial success be classified as being completely debt-free?”

The answer to the second question is yes. However, in regards to the first question, knowing how to use credit (debt) to your advantage can be one of the most useful tools for your financial success… IF you use it correctly.

In this article, we’ll be going over 6 perks of having a good credit score. These perks are helpful for those who can manage their money responsibly. They will also help them reach financial success sooner than if they didn’t use credit at all.

Get a Lower Insurance Rate

Many insurance companies can, and often do, consider your credit history or use a credit-based insurance score to determine whom to offer insurance to and how much to charge.

While this isn’t the only determining factor for evaluations, it is one important piece of the puzzle.

Credit scores are generally evaluated to help insurance companies understand the likelihood of someone filing insurance claims that cost the company more than it collects in premiums.

If your credit score is low, you may find it more difficult to get approved for an auto insurance policy. You may also have to pay more in premiums.

For this point, however, keep in mind that a credit-based insurance score will never be the sole decision-maker of insurance approval or denial. It does not apply to all states in the US. Also, certain insurance providers (i.e., home insurance vs car insurance) have different rules and regulations to follow in terms of credit.

Stop Paying High Security Deposits

If you aren’t familiar with a security deposit, it is a sum of money given to a landlord, lender, or seller of a home or apartment as a measure of security in case of default or damage. It can be refundable or non-refundable, and can also be used to pay for damages or lost property.

For this point, keep in mind that your credit score shows how responsible you’ve been with your finances.

Your credit score is important when renting or buying because it shows the recipient of your security deposit how risky of a buy/renter you are. A good credit score shows that you’ve made consistent on-time payments on loans and credit cards and none of your financial accounts have defaulted (gone to collections).

A person with a low credit score or no credit score has little to no evidence of being a risk-free buyer/renter.

While a person with a good credit score is seen as less risky than someone with a low credit score.

A security deposit is based on how much risk the recipient is taking on when renting or selling their property. Therefore, if you have a high credit score, they may ask for a smaller security deposit. If you have a low score, they may ask for more.

In the case of renting alone, some landlords and property management companies have minimum credit score requirements that must be met in order to be able to apply for a unit at all.

Having a low credit score or none at all will not only require a higher security deposit, but it will also minimize your chances of approval to rent or buy and reduce your options of where you can live.

Get a Higher Credit Limit

For those who are unfamiliar with a credit limit, it is simply the maximum amount of credit that a financial institution or other lender will give to a credit user. For example, if my credit limit on one of my credit cards is $2,000, then that is the maximum amount that I am able to use.

As mentioned before, a high credit score indicates that you are responsible with your finances. Thus, to a financial institution or lender, when you have a high credit score, you are seen as a responsible credit user who pays back everything on time and consistently.

For that reason, they will trust you more and can extend a higher credit limit to you.

But don’t let a higher credit limit cloud your thoughts. Having a higher credit limit does not mean that you should go out and spend it to the max month after month. You should remain fiscally responsible and only spend what you can afford.

A general rule of thumb when using credit is to aim for a credit utilization ratio of 30% max. This means that if you have a $2,000 credit limit, you should be aiming to use a max of $600 per month to keep your credit utilization low.

The higher your credit utilization, the harder it hits your credit score.

Help You Get a Job

Believe it or not, some employers run credit checks as a part of their background check process. They conduct these credit checks for security purposes to get a quick snapshot of your previous history and how you handle responsibilities.

According to financial expert John Ulzheimer, formerly from FICO and Equifax, “Credit reports indicate whether or not you’re responsible. […]  They also indicate if you’re in financial distress. These are attributes that are important to employers. For example, would you want to hire someone in your accounting department who can’t manage their own obligations?”

A credit check in a potential position is usually one of the last steps in the hiring process, nonetheless, it contributes as a factor.

Help Your Childen’s Credit Score

When you have a high credit score, it is likely that your children’s score will be high as well. This is not only because you’re setting an example as a responsible credit user, but because you have a number of ways to help them build theirs.

One of the most efficient ways to do this though is to add your child as an authorized. An authorized user is a person who has permission to use another person’s credit card but isn’t legally responsible for paying the bill.

Before adding your child as an authorized user, make sure to call your card issuer to confirm that their activity will be reported to the credit bureaus.

Typically, there are minimum age requirements for your child to meet in order to be added as an authorized user on your account. Make sure to keep those in mind. Also, teach your child about responsible credit usage before adding them to your account.

Increase Your Chances to Get Approved for a House

Most people understand that a good credit score improves your chances of qualifying for a mortgage. This is because it proves to the lender that your chances to default on your loan are low, therefore, you’re less risky.

And although there are options out there to apply for a mortgage without a credit score (via a longer process called manual underwriting), across the board, you’re chances to get approved for a mortgage are higher when you have a high credit score.

Manual underwriting is a time-taking process that will require a lot more information from you than if the lender simply looks at your credit score.

On top of that, you will be approved with an above-average mortgage rate that people with lower credit scores cannot attain.

Save Money On Interest

This point ties strongly with the last one regarding mortgages.

Whenever you borrow money, there will always be a price for it. Now, in the case of credit cards, you don’t necessarily have to pay that if you’re responsible with your credit. But in the case of bigger loans, like a mortgage, you’re going to have to pay some interest for borrowing that money.

The amount of interest you’re charged for borrowing money depends strongly on your credit score. A good credit score will result in lower interest rates, while a bad score will result in higher interest rates.

Remember, compound interest can work with you as well as it can work against you, so minimizing your interest rates will actually save you THOUSANDS if not MILLIONS of dollars in the long run.

How do you minimize this interest? Get that credit score up!

Final Words

I’m personally a fan of credit and I believe it is a great tool to help people build wealth. However, although it is a slower process, building wealth without a credit score is also possible.

I will never say that everyone should either stay away from credit or use credit because the thing about personal finance is that it should be what its name implies: PERSONAL.

Therefore, if you’re someone currently struggling to stop living beyond your means, credit cards and loans are probably not your best option, at least not right now.

It would be better to focus on your spending behavior and learning how to live below your means before you continue or start utilizing credit. Otherwise, it will cause nothing more than another financial hole in your life. 

For those of you who are responsible with money, credit is a great option to speed up your wealth-building journey!

Situations are unique and there will never be a one-size-fits-all in personal finance.

If you have any questions or comments, please leave them down below in the comment section. I will be more than happy to read and respond to each of them!

Spread the wealth!

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  1. Dave Ramsey may be correct that financial success does not require a credit score but, as you show, other things do.  A few years ago, I lost my apartment due to foreclosure.  The previous owner (seemingly) fell off the face of the Earth trying to outrun his debts, the new owner was a management company who wouldn’t give me a reference because they knew nothing about my rental history.  I had a terrible time finding a rental, even though I offered to pay the lease in full.   Eventually, I found someone who would take a reference from the former building manager/maintenance guy.  Yes, credit does matter, even if you have the money to pay in full.   

    1. Exactly! And it’s situations like these why I don’t want people to think that credit doesn’t matter. I used to believe it when I was younger and I’m glad that it didn’t take too long for me to learn that this was a misconception of reality. Credit can be tremendously beneficial as long as it’s used correctly, as your situation clearly demonstrated. I really appreciate you sharing your personal experience with this. More people need to know about these kinds of circumstances where the “credit isn’t necessary” idea may not be the best idea. 

  2. I think the key point here is that too many people live beyond their means, just trying to show off. In this land of make-believe, the sure outcome is debt. However, there is a way out but the only solution implies a change of mindset. Even if somebody pays the debt for a person that can’t pay, but they haven’t changed their mind, they’ll just get into debt again.

    1. You are 100% correct! We must know how to use credit so that it’s actually a benefit in all aspects

  3. This is a very important post as everyone needs to be fully aware of the importance of a credit score, as it affects all financial transactions that we enter into.

    It is important to be financially active, but it is doing it responsibly that is the key.

    Thanks for sharing this and hopefully many people will benefit from it.

    1. You are 100% correct! 

  4. Maria Theresa Gonzales

    Credit can bring both good and bad, depending on how an individual handles it.  But it is advisable that taking care of one’s credit standing is essential to gain the trust of other persons or an entities, once it is broken the accessibility of personal or business loans would be illusive. 

    1. Yes absolutely! Credit is amazing but if a person is not good at handling it and their finances then it is simply better to stay away from it until they can get themselves together

  5. It is interesting to read your article as I remember my father giving us a lecture very young on building a good credit rating. Even in Australia, it is difficult to get a loan or mortgage without a good credit rating. I totally agree with you that this isn’t a negative concept but a positive one if you learn to use credit to your benefit. after a lifetime of living below my means it has really paid off, so I would recommend working on your credit rating all the time.

    A great skill to teach your children.

    1. 100% agreed!

  6. Hello there, Misael! This is an informative and important post! I feel like it can t be emphasized enough how important it is to get a good credit score. I know some of the more common benefits to have a good score but your article provided even more benefits that I haven’t thought of. I did not know some employers would run credit checks on employees, that’s pretty crazy but it makes sense. Thanks for compiling this list!

    1. Of course! Thanks for surfing around the site 🙂

  7. Hi Misael, thank you very much for this fantastic article. I think you are absolutely right. You can achieve your goals faster with credit debt. Not for everyone, of course. You have to know exactly what you are doing with credit, but that is the case with every situation in life. My parents are my great role models. They were brave enough to take out loans, bought a beautiful house, and lived happily in this house they never could have owned with their own money for years. When the children all moved out, they sold it well and were able to stop working at the age of 58. 

    1. That is awesome to hear! Thank you so much for your feedback!

  8. Hey, thanks for this. And I always thought that your credit score is penalized if you don’t regularly use enough of your available credit whereas you are pointing out that it is actually the reverse. Well, actually that raises a question. You said that it can damage your credit score if you regularly use more than about 30% of your available credit on a monthly basis. But is there a percentage figure that you have to stay above otherwise that would hurt your credit score? I mean should you be using at least 5% or 10% or is that not a consideration? Thanks, Andy

    1. Thanks for your question, Andy. The 30% rule is theoretical, it’s okay to go a bit above or a bit below but 30% keeps people in a safe standard. Technically, every time you use credit it counts against you but paying back consistently far outweighs that. 

  9. Thank you for this insightful information. I was very informative. Also, great information about manual underwriting! I will be sharing this to loved ones. I really think that the information you’ve provided needs to be on a billboard somewhere! It’s literally the single most important thing as an American and if you know-you know! Cheers!

    1. Thank you for your feedback 🙂 happy to hear this was helpful 🙂

  10. A great article – you’ve even listed 7 perks, not just the headline 6! So many people don’t understand why it’s important to have a good credit score or what they can do to improve it and your post takes them step by step through the reasons why it’s a good thing to be aware of. 

    I’ve had a browse round the rest of your website and think the information you’re providing is really useful, thank you! All the good stuff that we don’t get taught in school!

    1. Thank you so much for catching that! I added one later on and forgot to change the headline 😅 

      And I’m very happy to hear that you’ve found value in this info! Thank you so much for your feedback!

  11. Thank you very much for explaining the benefits of a good credit score. I always try to maintain my high credit score, so knowing these perks is really advantageous for my financial planning. Having a high credit card limit is one benefit that I already feel. Also, it’s nice to hear that I’m able to pay a much lower security deposit 🙂 Thanks for this useful knowledge.

    1. Of course 🙂

  12. Hi Misael,

    Financial education is key to leading a better life. After all, everyone seeks financial freedom, who doesn’t? Most people are out here stuck on debts for very simple reasons. One of the things that has helped overcome my extravagant expenditures was tracking where every cent of my income goes. If people would just be keen enough with their finances, Financial success wouldn’t be a destination, rather, a way of life

    Great article!


    1. You are absolutely right! Thank you so much for your feedback 🙂

  13. Hi Misael,

    Very true and awesome points in discussing credit score.

    Our evaluation for many of our major financial transactions like car insurance, house purchase, bank loans and more are being based with our credit score. 

    Also if we want to authorize any of our young children to use a supplemental card.

    And yes, I agree that we have to properly manage our credit card/s to increase our credit score.

    1. Yes absolutely! Thank you for your feedback 

  14. Hi, I’ve just gone through your article on what you can do with a good credit score. I find it very educative and informative. I never realized that knowing how to manage your credit correctly and having a good credit score can actually speed up your journey to financial freedom as you clearly stated. I only thought that debt itself hinders financial success. Thank you for sharing such helpful information with us. I will be visiting your site often to learn more about having a good credit score. Thank you once again.

    1. Glad to hear this was helpful 🙂

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