By Jonathan Roisman, NextAdvisor.com
Have you ever thought of how an excellent credit score may impact your life? It's no secret that there are a number of benefits to having a high score. Simply put, it can affect many of your current and future financial decisions. If your credit is excellent, for instance, you have a better chance at getting a lower interest rate when applying for a credit card or loan. Here are a few things that excellent credit scores can do for you.
What Excellent Credit Can Do For You
1. Lower interest rates
The amount of money you're charged for taking out a loan — whether it's for a car, house, or anything else — or applying for a credit card will be lower if your credit score is high. A lender will consider you a good bet to repay a loan if you have a history of paying on time. So how does this save you money? The difference of even just one percent of interest on a 30-year mortgage can be in the tens of thousands of dollars over the life of the loan.
2. Approval for higher limits
Banks will be more willing to lend you larger amounts of money with a good credit score. You are also eligible for higher credit card limits. This not only helps you have greater purchasing power, but it also allows you to potentially raise your credit score if you don't use a lot of the available credit. Utilizing less than 30 percent of your total available credit can raise your score significantly since credit utilization is nearly one-third of how your FICO score is calculated.
3. More rewards
Are you looking for credit cards with the best rewards? You're going to need excellent credit. Many credit cards that offer the best cash back, travel points and other kinds of rewards require you to have a score in the excellent range. Some cards offer hundreds of dollars worth of bonuses for signing up and spending a certain amount of money in an allotted time frame. Getting approved for these kinds of cards, however, requires you to have a favorable credit score. If you have excellent credit, these are some of the cards with the best rewards.
4. Easier approval for renting an apartment
It's common for landlords to use credit scores to determine if they will rent to you. It can make property owners nervous if they see you have a history of delinquency on your payments or no history of credit at all. The higher your score, the more confident a landlord usually is in letting you rent since they know you're more likely to pay on time. It should also be noted that you can still get approved for an apartment with not-so-perfect credit, however your landlord will likely require you to pay a higher security deposit.
5. Better insurance rates
Many auto insurance companies see a bad credit-based insurance score — a score that is partially based on your credit history — as a sign that you're more likely to file a claim. While your credit score will affect what kind of interest rate you get on a loan, a low credit-based insurance score can raise your insurance rates for your car, house and other property.
California is the worst state for foreclosures, and unemployment and bankruptcy also are severe problems, according to CardRatings.com. State unemployment rate in July 2012: 10.7 percent (Labor Department).
Arizona has the second worst foreclosure rate in the country, and many Arizonans also have low credit scores, according to CardRatings.com. State unemployment rate in July 2012: 8.3 percent (Labor Department).
Many Floridians are stuck in foreclosure, delinquent on their credit card debt, unemployed, bankrupt, or have low credit scores, according to CardRatings.com. State unemployment rate in July 2012: 8.8 percent (Labor Department).
Georgia is one of the worst five states in unemployment, bankruptcy rates, average credit score, and credit card delinquency rates, according to CardRatings.com. State unemployment rate in July 2012: 9.3 percent (Labor Department).
Nevada has the worst unemployment rate, personal bankruptcy rate, and average credit score in the country, according to CardRatings.com. State unemployment rate in July 2012: 12.0 percent (Labor Department).
Iowa has a lower than average unemployment rate, lower than average credit card delinquency rate, and higher than average credit score. State unemployment rate in July 2012: 5.3 percent (Labor Department).
Montana has above-average credit scores, fewer personal bankruptcies, fewer foreclosures, and less delinquent credit card debt than other states, according to CardRatings.com. State unemployment rate in July 2012: 6.4 percent (Labor Department).
South Dakota has better than average employment and credit scores, according to CardRatings.com. It also has fewer personal bankruptcies, fewer credit card delinquencies, and fewer foreclosures. State unemployment rate in June 2012: 4.4 percent (Labor Department).
Vermont was second best in the country in the foreclosure and personal bankruptcy categories and was above average in the other three categories. State unemployment rate in July 2012: 5.0 percent (Labor Department).
North Dakota "may be the best-kept secret in the country," CardRatings.com says. It was the best state in three categories, including unemployment, and fourth best in the other two, according to CardRatings.com. But remember that if you move there, you would have to live in North Dakota. State unemployment rate in July 2012: 3.0 percent (Labor Department).
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