08/16/2014 05:40 pm ET Updated Oct 16, 2014

5 Things Excellent Credit Can Do for You

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By Jonathan Roisman,

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.

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