Advantages of Having a Good Score on Credit

Posted Thursday, Jan 16, 2025

 

A good credit score isn't just a number; it's your golden ticket to a better life. Think of it as your VIP pass to better loans, lower interest rates, and exclusive offers. A strong credit score unlocks financial opportunities, including access to the best car dealership offers.

On the contrary, if your credit score is lower, you might feel stuck in a loop of loan rejections, higher interest rates, and frustrating paperwork. No one wants to get trapped in that cycle, especially when making major life decisions like purchasing a used car.

The average U.S. credit score in 2024 was 715, considered "good." While this does offer you numerous benefits, there's still room to reach the coveted "excellent" range. So, do you have a good credit score? Let's find out!

How to Assess Whether You Have a Good Credit Score

When determining your credit score, lenders usually focus on two key factors: your payment history (whether you’ve been paying bills on time) and your current debt levels. The scores range from 350 to 800. A good credit score ranges from 670 to 739, while scores above 739 are deemed excellent.

How Is Your Credit Score Calculated?

 

  • Payment History (35%) – Have you consistently made timely payments?
  • Amount Owed (30%) – How much do you currently owe?
  • Length of Credit History (15%) – How long have you borrowed money?
  • New Credit (10%) – Have you recently opened new accounts?
  • Credit Mix (10%) – Do you maintain various credit types?

Each factor contributes to your overall score, so managing all of them effectively is essential to maintaining a good credit score.

Why Does a Good Credit Score Matter? (Hint: It's a Big Deal)

Better Loan Approval Rates

Imagine you've found your dream used car, an SUV with all the features you've been searching for. But sadly, there's one hurdle between you and that car: the loan approval process. With a good credit score, more loan options are available, as lenders will see you as a low-risk borrower.

On the flip side, if your credit score isn't great, you'll face numerous hurdles, such as more paperwork and the need to prove your reliability. A good score simplifies this process, making loan approval faster and easier.

Lower Interest Rates (Who Doesn't Like Saving Money?)

When you take out a loan, your credit score determines the interest rate. A major advantage of a good credit score is the lower interest rate offered to you, so you'll pay less over the life of the loan.

For example, someone with a credit score of 780 might secure a 3% rate on buying a used car, while someone with a score of 620 would be required to pay at a rate of 6%. Over five years, that 3% difference can add up to thousands of dollars for you.

Faster Approvals = More Time Enjoying Your New Ride.

A good credit score makes the loan approval process faster. With a good score, you won't have to wait for weeks. The quick paperwork process ensures you can leave the dealership in your new car right away.

More Negotiating Power for Better Value

Let's say you're at the car dealership, ready to negotiate. With a good credit score, you can confidently approach the table and say, "I have impressive credit and a solid financial history—what can you do to make this deal sweeter for me?"

Car dealerships are more likely to offer better deals, such as lower interest rates or added incentives, to financially reliable and stable customers.

Your credit score will give you leverage to secure better terms and improve your overall buying experience.

Higher Credit Limit

A good credit score doesn't just help you with loans; it can also boost your credit limit. It is beneficial if you're eyeing a more significant purchase, like a luxury used car or even a mortgage on a new home.

A higher credit limit gives you more flexibility and financial room, so you don't have to worry about maxing out your credit card. Higher credit limits are also helpful during emergencies when you need extra funds but don't want to hit your credit limit. Having access to available credit offers a feeling of security and financial flexibility.

Save Money on Car Insurance

Did you know your credit score can affect your car insurance premiums? Insurance companies often consider your credit history when determining how much you'll pay for coverage.

With a good credit score, you'll likely pay lower premiums, saving you quite a large sum of money in the long run.

Final Thoughts

A good credit score is more than just a figure—it’s your key to unlocking opportunities and building a secure future for yourself and your family. With a strong score, you get better loan rates, faster approvals, and the chance to negotiate better terms and save on insurance.

Your financial future depends greatly on the strength of your credit score. Start building and protecting it now, and watch your financial life improve significantly. Fiesta Motor Ontario offers excellent deals for customers with good credit scores. Reach out to us today for your new ride!

Tags: