5 Little-Known Benefits of Having a High Credit Score

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Good credit offers far more benefits than just lower interest rates.

Key points

  • A high credit score is a significant advantage in any situation requiring a credit check.
  • Rental inquiries and setting up utilities are two common situations where your credit could come into play.
  • Your credit can also affect your insurance rates in most states.

Personal finance advice talks a lot about the importance of a high credit score, and you probably already know some of its benefits. It helps you qualify for lower interest rates on any type of loan, including mortgages. It might also help you get approved for the best credit cards which are not available to consumers with lower scores.

But what if you don’t plan on borrowing money and credit cards aren’t a big deal for you? There are still many ways your credit can affect your daily life that many people are unaware of. Here are the little known benefits a top credit score bring you.

1. It’s easier to rent a house

A credit check is an integral part of the rental process. Most property management companies do, and even if you’re renting directly from the landlord, chances are they’ll want to check your credit.

Some landlords turn away applicants who don’t meet minimum credit score requirements, especially if they have a choice of other potential tenants. Or, they may require a larger security deposit. With a high credit score, it will be much easier for you to get approved for a rental without having to pay extra upfront.

2. You could get cheaper home and auto insurance

Although a controversial practice, insurance companies can use credit scores to help set premiums in most states. There are currently only three states that prohibit the use of credit scores to set insurance rates: California, Hawaii and Massachusetts.

Everywhere else, your credit history is fair game for insurance companies. It can also make a huge difference. In The Ascent’s research on the average auto insurance rates, drivers with excellent credit paid an average of $1,846 per year for car insurance. Drivers with bad credit paid more than double, $3,955, on average.

3. You don’t need to post a deposit for utilities

Your credit could even affect something as simple as turning on the electricity and water in a new location. Utility companies often require people with low credit scores to pay a deposit to receive service. People with high credit scores don’t normally need to.

So, in addition to possibly paying a much larger security deposit for an apartment, you may also have to pay more deposits to utility providers. As you can see, moving costs could be much higher if your credit score is on the low side.

4. It can help with pre-employment exams

About 25% of employers perform credit checks when hiring for certain positions, according to a national survey by the Professional Background Screening Association and HR.com. Although employers don’t see your credit score, they get an edited version of your credit report that includes your accounts, payment history, and credit usage.

For some types of jobs, your credit history could make or break your application. If you are applying for a position that will have access to money, sensitive data, or that requires a security clearance, the employer will most likely check your credit.

5. It can help you get a smartphone and wireless service

Most major wireless carriers offer financing plans for popular smartphones. If, for example, you want upgrade to iPhone 14, many carriers allow you to pay the price of the phone in monthly instalments. They will also do a credit check to see if you have a habit of paying your bills on time.

A credit check is also usually required to obtain postpaid wireless service. However, you can avoid this by opting for a prepaid mobile plan.

A high credit score makes life cheaper and more convenient in several ways. If you haven’t already, it’s worth learning how to increase your credit score therefore yours is a help and not a hindrance.

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