Here's How Having a Better Credit Score Could Save You Money

If you live in the United States, it's wise to care about your credit and know where your credit score stands. Your credit score is a financial indicator that creditors look to when determining whether to extend credit to you. The good news is that you can make choices that help you improve your credit score. Even if you have work to do, you can make progress, so don't give up. Here are a few ways having a better credit score could save you money. 

You may qualify for a better apartment

It's common to have a credit check run when you apply for an apartment. If you have bad credit, your application may be denied. Alternatively, if approved, you may be asked to put more money toward a security deposit.

Those with better credit and higher credit scores may qualify for more apartment rentals, including nicer rentals, cheaper rentals, or rentals in prime locations. Improving your credit could help you save money and improve your living situation. 

You can get a better insurance rate

Many factors determine insurance policy rates. With auto insurance, for example, your age, driving history, location, and type of car you drive can impact the rate you pay. Your credit score can also affect the cost of your auto insurance policy (in most states). It can be beneficial to work to improve your credit score to avoid paying more than necessary for auto insurance coverage. 

You can get a better rate when borrowing money

Most of us will need to borrow money at some point during our lives. You may need an auto loan to replace your car or decide to apply for a home mortgage when you're ready to become a homeowner. However, if you have bad credit, you may struggle to get a loan approval. 

A poor credit score can also result in getting approved for a loan with a higher interest rate. The higher your interest rate, the more money you'll pay in interest fees throughout the life of your loan. If you have good credit, you'll be more likely to get approved for a loan with a lower rate. 

You can access valuable credit card rewards and benefits 

Having excellent credit can also allow you to access better credit card rewards and benefits. While you may qualify for a credit card with a poor or average credit score, getting approved for premium rewards credit cards with better perks is difficult. Many of the best rewards credit cards are available to consumers with excellent credit. If you want to access valuable credit card benefits or earn rewards that could save you money, pay attention to your credit score. 

How to improve your credit score

As you can see, a better credit score could be a win for your bank account. Increasing your credit score could help you save money and improve your life. Many creditors use the FICO® Score rating system. Here's a breakdown of what factors make up this score and how much each factor impacts your overall score: 

• Payment history (35%) 
• Amounts owed (30%)
• Length of credit history (15%) 
• Credit mix (10%)
• New credit (10%)

Are you ready to take action to improve your credit score? That's great news! Paying your bills on time and using only some of your available credit can help a great deal. 

Other ways to improve your credit score include having an extensive credit history, a good mix of credit accounts, and a reasonable number of credit inquiries (avoid applying for new credit frequently). For additional financial tips, check out our personal finance resources.