Your credit score is a three-digit number that gives you and other interested parties an idea of your creditworthiness. Think of your credit score as a sort of report card, and just like good grades on a report card, the best deals go to those with the best grades. A question we often hear is, “Can a better credit score help me lower my bills?” Let’s look at how a better credit score can improve your overall financial picture.
What Does Your Credit Score Tell Creditors?
Credit scores range from 300-850 and they’re based on a combination of factors. One of the biggest factors is your payment history, especially whether you’ve paid borrowed money back as agreed. If you’ve had credit problems such as past due payments, collections accounts, bankruptcy, or foreclosure, it can bring down your credit score for seven to ten years, which can make it hard to be approved for credit at the best interest rate and terms.
While creditors may differ in what numbers they consider good credit, most see a credit score of 670 or higher as a good score. The higher your credit score is, the better deals you’re likely to be able to get. Your credit score is used in many different situations. It’s used by potential creditors to determine the risk they’re likely taking if they decide to loan to you. It may also be used by insurance companies, potential employers, and cell phone companies.
Benefits of a Better Credit Score
When you have a poor credit score, you may have difficulty getting approved for credit or you may find that some lenders are willing to loan to you, but only at a high-interest rate. A higher interest rate means larger monthly payments and possibly a longer amount of time needed to pay back a loan. A better credit score also means great deals on credit cards, such as low-interest rates, cash back rewards, and airline miles, which can all contribute to helping you lower your bills.
A better credit score may also help you save on insurance. Some insurance companies operate on the principle that people who have poor credit scores file more claims, which means a good credit score may help you to save money on insurance. A poor credit score may mean you have to pay a security deposit on a cell phone plan or a higher security deposit on a new apartment.
Improving Your Credit Score
Work on improving your credit score so that you can enjoy the benefits that go along with a high score. The most important thing to do is to pay all your bills on time without fail. Sign up for reminders or automatic transfers with creditors so there’s no chance of forgetting to pay a bill. Keep the balance of your credit cards low and avoid applying for new credit if you don’t need it.
Review your credit reports to make sure there are not any errors. Dovly is an automated credit repair engine that can help you track, manage, and correct any errors with your credit. Try it risk-free with our free membership tier. Contact Dovly today.