5 Perks of Having Great Credit

Great credit can give you the proverbial keys to the kingdom.

Unless you live under a rock -- one without Wi-Fi -- chances are pretty good you've heard half a dozen commercials this week alone about the importance of checking your credit scores. But what a lot of these commercials fail to pass on is why.

Sure, we all know that a credit card issuer will check your credit when you apply. But credit checks aren't just for credit cards and loans. These days, your credit is checked for just about everything. Getting a new apartment? Credit check. Applying for a new cell phone line? Credit check. Looking for a new job? Yep, you guessed it, there's probably going to be a credit check.

Folks are clearly concerned about your credit history. The upside to all these credit checks, though, is that having an impressive credit score can unlock a lot of doors. Here's a look at just five perks of having great credit.

1. Easy approval for most credit products

One of the best parts of having great credit is having your pick of the premium credit cards. Have your eye on that luxury travel rewards card? Go for it! Want that awesome new cash back card? Give it a shot!

With great credit, most credit card issuers will be happy to have you, meaning you can likely get approved for almost any card you want. Unless a card is invite-only or the issuer has restrictions, your chances of being approved are pretty high when you have great credit.

And this goes for more than credit cards. Personal loans, auto loans, mortgages -- they're all available to you when you have excellent credit.

2. Low interest rates on loans and credit cards

Not only does having good credit make it much easier to be approved for just about any credit card or loan you need, but it also means you'll get the best interest rates. Most credit products have a range of annual percentage rates (APRs) from which your rate is set. The better your credit history, the more likely you are to get assigned an APR on the low end of that spectrum.

For example, if a credit card has an APR range of 14.99% to 24.99%, the applicant with excellent credit will likely be offered the 14.99% rate. Similarly, an applicant with a lower credit score will most likely be offered a rate towards the 24.99% end of the range.

Since the amount of interest your pay on a loan or credit card balance is determined by the APR, a lower rate can save you a lot of money. This is especially true when it comes to long-term loans, such as auto or mortgage loans, which can cost you thousands in interest over the course of your loan.

3. Higher credit limits and larger loans

Your credit history also comes into play when it comes to how much credit you can get. When you apply for a credit card, the size of the credit line you're offered will be based on both your income and your creditworthiness. Applicants with excellent credit will receive much higher spending limits than those with lower scores, even if they have similar income levels.

This also goes for the size of the loan you can get. While you'll still be capped by your income (and, in some cases, your down payment) to an extent, you'll be much more likely to get the loan you want if you have the great credit to back it up.

4. No (or low) deposits for rentals and utilities

As mentioned at the beginning, your credit history will impact more than just your credit cards and loans. Every time you apply for, well, almost anything, your credit can come into play. That's because many businesses use your credit history as a way to judge how risky it is to do business with you.

In other words, when you set up new utilities, apply for a new apartment, or even set up a new cell phone plan, the company is going to do its research on how well you've paid your bills in the past. A great credit history shows that you can responsibly handle credit and debt, so there's less risk that you won't pay what you owe.

The deposit you're asked to pay when setting up new accounts or getting a new apartment is the way the company mitigates its risk. If you're seen as a risky customer, they'll ask for a larger deposit. Lower-risk customers require lower deposits or, sometimes, no deposit at all.

5. Lower home and auto insurance premiums

Another place your risk level comes into play is when you get insurance. Accurate or not, consumers with lower credit scores are often seen as a financial risk. That's why credit checks are a regular part of applications for insurance, be it home or auto insurance.

If your credit is in great shape, chances are good you'll be offered lower insurance premiums than someone with similar needs but a lower credit score. This could mean a difference of tens, if not hundreds, of dollars in premiums over the course of a year.

It's never too late to build great credit

Although you can still get by in today's financial world without credit, it's definitely getting more difficult. Between digital payments and sky-rocketing home and auto costs, the ability to live a credit-free life is dwindling.

Thankfully, it's never too late to improve your credit. Many credit-building products, like secured credit cards, can be obtained even if you have poor or limited credit. Moreover, nothing stays on your credit reports forever, and even major mistakes will eventually disappear. Pay your bills on time, keep your card balances low, and your credit should grow over time.