Your credit score is more than just a three-digit number; it tells lenders how responsible and disciplined you are with your money. Your credit score is a number between 300 and 850 that shows how good you are at paying your bills on time, how much credit you use, how long you’ve had credit, what kinds of credit you have, and how many new credit inquiries you make. If your credit score is “good,” which is usually 670 or higher, lenders, insurers, landlords, and even potential employers will know that you are a responsible borrower who can handle debt and make payments on time.
Having a good credit score has a lot of real and intangible benefits in today’s economy, where being able to get credit is important for big life events like buying a house, renting an apartment, starting a business, or even getting a job. This article lists the five best reasons to have a good credit score, using data, expert opinions, and examples from real life. We’ll also answer common questions, give you helpful tips on how to improve your score, and finish with the best ways to keep your money in good shape over time.
1. Loans and credit cards that charge less interest
Why Interest Rates Matter
Interest rates determine how much it costs to borrow money. Over the life of a loan, even a small difference in interest rates can add up to thousands of dollars. You can usually get the lowest interest rates if your credit score is high. If you have a low score, you might have to pay more interest or not be able to get a loan at all.
How a Good Score Lowers Costs
- Mortgage Loans: Freddie Mac says that people with credit scores of 760 or higher can get mortgage rates that are about 0.5% to 1.0% lower than those with scores between 620 and 639. Over the life of a $300,000 mortgage, that difference can save you more than $40,000 in interest.
- Experian’s 2024 State of the Automotive Finance Market report says that prime borrowers (scores 661–780) pay an average of 5.04% APR on their auto loans, while subprime borrowers (scores 501–600) pay an average of 12.23% APR.
- Credit Cards: People with scores of 740 or higher get the best APRs from card issuers. These are usually between 13% and 15%. People with scores below 640 might only be able to get cards with interest rates of more than 20% APR.
Real-World Effects
Think about Jane is 32 years old and works as a software engineer. Her FICO score is 780. She took out a loan with a 3.9% APR to buy a $25,000 car. With a 650 score, Mike, her neighbor, got the same amount of money at 11.5% APR. Jane paid about $2,055 in interest over five years, while Mike paid $4,022, which is almost twice as much in finance charges.
2. Faster approval and higher credit limits
How quickly and easily you can get approved
Lenders and credit card companies can quickly decide who to lend money to based on credit scores. If you get a high score, your application might be approved right away. If you get a borderline score, someone might have to look at it, which could take longer or lead to a denial.
Access to High-End Credit Products
People with high scores not only have an easier time getting cards and loans, but they also get better benefits, such as:
- Rewards credit cards give you more than 3% cash back, travel points, access to airport lounges, and concierge services.
- 0% Intro APR Offers: You can get promotional financing for purchases or balance transfers for 12 to 18 months.
- High Credit Limits: Lenders are more likely to give you larger revolving lines of credit, which will help your credit utilization ratio (a big part of your credit score).
Effect on Use of Credit
When you have a higher credit limit, your utilization rate (balance vs. limit) goes down, which can help your score even more. If your limit is $10,000 and your balance is $2,000, your utilization rate is 20%. Your utilization rate is 40% if you have a $5,000 limit and a $2,000 balance. Fair Isaac Corporation (FICO) says that the best use is less than 30%.
3. Lower costs for insurance
How Credit and Insurance Are Connected
Many U.S. insurance companies use credit-based insurance scores to guess how likely it is that someone will make a claim in the future. The Consumer Federation of America says that people with bad credit scores file claims more often and pay more for them.
Lower rates for car and home insurance
InsuranceQuotes did a study and found that people with good credit scores paid 50% less for car insurance than people with bad credit scores. In general, this saved them $1,500 a year.
The National Association of Insurance Commissioners says that homeowners with higher credit scores pay much less for homeowners insurance. They can save between $200 and $400 a year on their insurance.
A Sample Case
Alex pays $1,000 a year for full-coverage car insurance because his credit score is 800. Sarah, his friend, has a 600 score and the same driving history as him, but she pays $600 more each year than he does.
4. More likely to rent or buy a home
What landlords and property managers need to do
Landlords often look at the credit scores of people who want to rent from them to see if they can pay their rent on time. A good credit history can:
- Get the Units You Want: Rentals in cities with a lot of competition fill up fast. A high score can help you stand out from other people who have lower scores.
- Don’t Pay More: Landlords often ask tenants with bad credit for bigger security deposits (sometimes equal to one or two months’ rent) or to pay rent in advance.
Getting a loan for a home
Having a good credit score is important for getting a mortgage, not just for renting. Most banks want:
- The lowest score for FHA loans is 580, and you need to put down at least 3.5%. The lowest score for a regular loan is 620.
- Premium Rates: As we said before, a higher score means lower mortgage rates, which means your housing costs will go down over time.
For example
A Zillow report says that people who want to rent in cities with a lot of competition, like New York City or San Francisco, are 30% more likely to get their applications approved without having to pay more money if their credit scores are over 700.
5. More chances to get a job or start a business
Job Screening
Checking the credit of job applicants is common in the U.S., especially for jobs that involve handling money. A strong credit history shows that you are reliable, responsible, and honest, which is what employers want.
Business loans and partnerships
If you have good credit, you are more likely to:
- Get Small Business Loans: Most regular banks want personal guarantees. If you have a good score, you are more likely to get a loan with better terms.
- Talk to your vendors about their terms: Suppliers may offer business owners with good credit net-30 or net-60 payment terms, which can help them better manage their cash flow.
For example, in real life
Lisa has a credit score of 785 and owns a small business. She got a $50,000 line of credit at 5% APR to help her pay for her inventory. Mark, her rival, had a score of 640 and got an offer from the same lender with a 12% APR and a lower credit limit of $20,000.
More Advantages
The five most obvious benefits are the best, but there are other benefits as well:
- Lower Security Deposits on Utilities: Customers with good credit often don’t have to pay as much or at all for deposits on their electricity, gas, and phone service.
- Better Cell Phone Deals: You may need to have your credit checked to get a premium smartphone plan or financing for a device. If you have a good score, you won’t have to pay early upgrade fees or make a down payment.
- Peace of Mind: It’s easier to handle emergencies or unplanned costs when you know you can get credit and have some money on hand.
Commonly asked questions (FAQs)
Q1: What does it mean to have a “good” credit score? A: FICO puts scores into these groups:
- 300–579: Not good
- 580–669: Not too bad
- 670–739: Good
- 740–799: Very Good
- 800–850: Great.
Q2: What are some quick ways to improve my credit score? A: Pay attention to these five main things:
- Payment History (35%): Always pay on time.
- Credit Utilization (30%): Keep your balances below 30% of your limits.
- Length of Credit History (15%): Keep accounts that are old open.
- New Credit (10%): Don’t ask for too many hard inquiries.
- Credit Mix (10%): You should have a variety of accounts.
Question 3: Will looking at my own credit score hurt it? A: No. If you do soft inquiries, like checking your own credit, your score won’t change. When lenders check your credit for new loans, your score only goes down.
Q4: How long will wrong information stay on my credit report? A: If you don’t pay your bills on time or at all, they will stay on your credit report for up to seven years. Bankruptcies stay on your record for up to ten years.
Q5: Do you need to use credit monitoring services? A: Yes. Monitoring services let you know about new inquiries, score changes, and possible identity theft, so you can take care of problems right away.
To sum up
If you have a good credit score, you can get better loan rates, faster approvals, better insurance rates, and more job and housing options. Its benefits cover all areas of personal finance, from daily expenses to long-term goals. You can unlock these benefits and have a better financial future by learning about what affects your score and following good money habits like paying your bills on time, using credit wisely, and keeping an eye on your credit.
References
- Freddie Mac – “Primary Mortgage Market Survey® Weekly” (2025). Available: https://www.freddiemac.com/pmms
- Experian – “2024 State of the Automotive Finance Market” (2024). Available: https://www.experian.com/automotive/
- FICO – “What’s in My FICO Scores?” (2025). Available: https://www.myfico.com/credit-education/whats-in-your-credit-score
- InsuranceQuotes – “Auto Insurance Rates and Credit Scores Study” (2024). Available: https://www.insurancequotes.com/news/credit-score-impact
- Zillow – “Rental Application Trends” (2024). Available: https://www.zillow.com/research/rental-application-trends-2024
- Society for Human Resource Management (SHRM) – “Background Checking—The Impact of Credit Screening” (2023). Available: https://www.shrm.org/resourcesandtools/tools-and-samples/legal-pages/pages/background-checking.aspx
