Good credit is something that people who are financially responsible can enjoy. This does not just mean having a higher credit limit, but also having lower interest rates. If you are looking to lease, it can be a great option. If you take a few simple steps, you can quickly reap the benefits of good credit.
On-time payment of your bills
One of the biggest benefits of paying your bills in time is that you avoid many pitfalls that could result in late fees. Late fees can add stress to your finances and can prove costly. These pitfalls can be avoided with some strategies.
Automatic payments can be set up to ensure that you never miss a bill payment. Many providers offer this service online. To set up the payment, log in to your account.
Possessing a high credit limit
There are many benefits to having a high credit limit. You have more options when shopping and can take advantage of bigger rewards. It can give you confidence in your ability to pay unexpected costs. It can also help your credit score. For those looking to rebuild their credit, a higher credit limit will increase your chances for obtaining credit.
You can afford larger purchases such as major appliances or a new television with a higher credit limit. This means that you can use your card more freely, but be sure not to overspend. A negative credit utilisation ratio can result in you using your card less than your limit, which can appear bad to new creditors. Having a large credit limit also provides you with a larger emergency fund should you need it.
Lower interest rates
Higher credit scores can lead to lower interest rates when you apply for credit cards. People with good credit are more likely to make responsible financial decisions, and keep their accounts balances low over long periods of time. The lenders are more confident that these people will repay their debts, and will therefore charge a lower interest rate. This could save you money on your monthly payment. Applying for a lower rate of interest card may be a good option if you have poor credit.
You should be aware of your debt-to income ratio to get lower interest rates. A higher debt-to income ratio indicates that you are more at risk to lenders. Lenders are more comfortable with a debt to income ratio below 36%.
Signing a leasing agreement
You need to be able to cosign a lease if you have excellent credit. You need to be comfortable with the risk as it could affect your credit score. A cosigner is required to make sure the renter pays their bill. If you're not comfortable with cosigning, there are some other options available.
It is important to remember that your cosigner’s credit score will be used as a financial indicator to determine if the renter can pay the lease. A credit check will be required and income proof will likely be required. If your co-signer fails to pay the rent or has poor credit, that can negatively affect your credit score.
Applying for a loan
Good credit can make you more attractive to lenders and help you obtain lower interest rates. Most financial products come with an interest rate, and having good credit makes it easier to qualify for lower rates. In some cases, you may even qualify for 0% interest loans. Before you sign on that dotted-line, however, you need to first assess your credit.
Good credit scores are a sign to potential landlords or employers. A high credit score will increase the likelihood of a lender approving a loan to you if they believe that you will pay your bills on time. If you have good credit, you may be eligible for a greater loan amount.