Benefits of a Good Credit Score for Renters, Buyers, and Borrowers
Written by
Andrew Lisa
Edited by
Nupur Gambhir
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Your credit score is the avatar for your financial life, and a good one can get your credit, loan, lease or purchase application approved with the lowest rates, best perks and least amount of headaches and expenses.
Lenders, landlords and even employers check credit scores to verify that applicants are responsible with money, pay their bills and keep their end of the bargains they strike. On the other hand, bad credit scores reflect poorly on applicants and make people leery of hiring them, lending them money or taking them on as renters — and certainly not without making them pay for the excessive risk they pose.
This guide will explain what constitutes a good credit score and why it’s worth the effort to build one.
What Is a Good Credit Score?
Credit scores range from 300 to 850. A good credit score usually starts at 670, depending on the scoring model.
Score ranges:
- 300-579 = Poor
- 580-669 = Fair
- 670-739 = Good
- 740-799 = Very Good
- 800-850 = Excellent
Here are seven benefits of working hard to build strong credit.
1. Lower Interest Rates on Loans and Credit Cards
The most basic rule of credit is that the higher your score, the lower your odds of defaulting. Lenders see people with good credit as low risk, so they offer lower interest rates.
This can save you hundreds or thousands of dollars over the life of a loan.
Consider the following example of two borrowers with different credit profiles who finance the same $30,000 car over 60 months with a $6,000 down payment, excluding sales tax and registration fees.
| Financials | Excellent Credit Auto Loan | Poor Credit Auto Loan |
|---|---|---|
| Total Loan Amount | $24,000 | $24,000 |
| APR | 5.25% | 12.5% |
| Monthly Payment | $455.66 | $539.95 |
| Total of 60 Payments | $27,339.82 | $32,397.03 |
| Total Interest Paid | $3,339.82 | $8,397.03 |
| Total Cost | $33,339.82 | $38,397.03 |
| Interest as % of Total Cost | 12% | 26% |
2. Easier Approval for Loans and Credit Cards
With a good score, you’re more likely to get approved for:
- Credit cards
- Car loans
- Mortgages
- Personal loans
Tip:
Good credit demonstrates your responsibility with money, which makes lenders more comfortable lending to you.
3. Higher Credit Limits
Credit card companies may offer you higher credit limits when you improve your credit score. This gives you more spending flexibility and helps keep your credit utilization low, which is good for your score.
For example, a higher limit on your credit card can help you cover emergencies without maxing out your card.
4. Better Deals on Insurance
In some states, insurance companies check your credit to set your rates. A good credit score can help you get lower rates on:
- Car insurance
- Homeowners insurance
- Renters insurance
Why? Studies show people with good credit tend to file fewer claims.
5. Easier Approval for Apartments and Rentals
Many landlords check credit scores before renting to new tenants. A good score opens the door to:
- Increased approval odds
- Wider selection of better apartments
- More favorable lease terms
- Lower security deposits
- Avoiding the need for a co-signer
6. Better Credit Card Rewards and Perks
In the world of credit cards, those with poor credit pay the bank high interest rates, allowing the bank to offer better rates and more lucrative rewards to those with good credit. Good credit helps you qualify for credit cards with:
- Cash back rewards.
- Travel points.
- Lower interest rates.
- Extra perks like rental car insurance or airport lounge access.
Tip:
These cards often save you money and earn you money if you pay your balance off each month because you don’t pay finance charges if you don’t carry a balance.
7. More Flexibility in Emergencies
Good credit makes it easier to get a:
- Personal loan if you lose your job
- A low-interest credit card if you need emergency funds
- Short-term rental if you have a fire or some other housing crisis
hy Good Credit Is Worth the Effort
Building and maintaining good credit isn’t just about numbers — it’s about unlocking freedom and flexibility in your financial life. From saving money on interest and insurance to securing a new apartment or getting through an emergency, a strong credit score gives you options when you need them most.
It takes time and discipline to build great credit, but the payoff is long-term peace of mind and access to better opportunities. Whether you’re just getting started or working to rebuild, every positive step you take today can lead to a more secure and empowered tomorrow.
FAQ
- What is the biggest benefit of a good credit score?
- For many, the ability to borrow money at a fair rate is the primary benefit of good credit, but a higher score is always better, whether you’re borrowing money, buying insurance, looking for a job or renting an apartment.
- Can good credit save you money?
- Yes. Those with good credit save money in the form of lower interest rates and can even earn money through lucrative credit card rewards.
- Do landlords check credit scores?
- Many, but not all, landlords factor credit scores into their applicant approval decisions.
- Can good credit help in an emergency?
- Yes. The ability to borrow money cheaply and quickly is critical in many emergencies, and good credit always makes it easier.
