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Excellent credit score shows that you are very responsible with your finances, which can lead to many benefits. If you have excellent credit, lenders and financial institutions will treat you better and give you access to competitive interest rates and special credit offers. This excellent credit score can also increase negotiating power and lower insurance rates. Ultimately, having excellent credit gives you the power to make the most of your money.
Highlights/ Key Takeaways
- Excellent credit is typically a score of 800 and above.
- Excellent credit has many benefits, including lower interest rates and higher credit limits.
- If you have excellent credit, you should be taking advantage of it so it doesn’t go to waste.
- If your credit score falls, you shouldn’t lose hope because you can get it back up again.
What Does Excellent Credit Get You?
What can you do with excellent credit? Some benefits include:
- Better car insurance rates
- Lower interest rates
- Higher credit limits
Let’s dig a little deeper into what excellent credit can do.
Car and Home Insurance
Many insurance companies, including those specializing in car, home, and renter’s insurance, look at your credit history when making decisions regarding your coverage.
Some insurance companies look at your credit reports in order to decide whether to approve your insurance application and to decide how much to charge you for your monthly premiums.
For existing customers, insurance companies can decide whether to cancel your policy or raise your premiums. When you have excellent credit, you may be able to get a less costly plan.
Save Money with Lower Interest Rates on Credit Cards
What can you do with excellent credit? When you apply for a new credit card, the card issuer performs a hard credit check to look at your credit history. If you’re eligible you may qualify for perks like lower APRs, or annual percentage rates.
The APR is the annual interest rate you must pay to borrow money from the credit card companies. Credit card companies are notorious for offering their best rates to customers with high credit scores.
Higher Credit Limits
In addition to getting lower interest rates, you can also qualify for higher credit limits when you have excellent credit. An excellent credit score demonstrates a good credit history, which makes you more likely to receive a higher credit line from the card issuer.
Better credit also makes it easier for you to negotiate upgrades to your credit cards for better rewards and benefits.
Eligibility for Better Personal Loans
Personal loans can help you pay off any number of expenses, from home repairs to hospital bills to weddings.
When applying for personal loans with excellent credit, you’re more likely to qualify for loans with lower rates, more favorable terms, and higher amounts.
There are several lenders who have personal loans reserved only for those with excellent credit. These are, of course, harder to qualify for since less than a quarter of Americans have excellent credit.
Better Housing Options
When applying for a home mortgage or a new apartment, your credit score will be taken into consideration.
If you live in an area with limited housing options where apartment hunting is a competitive sport, an excellent credit score can help you stand out from other applicants and increase your odds of being the chosen tenant.
As with credit cards, excellent credit scores open doors to lower interest rates when applying for a mortgage.
Better Employment Odds
Some companies include your credit score in the background check they perform prior to officially hiring you. A credit history riddled with late payments or negative remarks like bankruptcy might raise red flags with your potential employer.
A strong credit score, on the other hand, might make you the more favorable applicant.
How to Take Advantage of Excellent Credit
There are many ways for you to take advantage of the excellent credit you’ve worked hard for. These include:
- Rewards credit cards
- Credit limit increases
- Home refinance
Rewards credit cards reward you for qualified purchases. You can use these rewards to save money on a variety of future purchases, from booking your next vacation to paying for your next Amazon buy.
Some rewards cards have sign-up bonuses that allow you to automatically rack up redeemable rewards. These cards give you cash back, miles, or points when you spend money.
The very best deals are reserved for those with excellent credit, so if that’s you, you should consider a rewards credit card for the purchases you already make every day.
Excellent credit also makes you more likely to be approved for credit limit increases. These increases help balance out your credit utilization ratio, which is an important factor in getting and maintaining good credit.
You should also take advantage of excellent credit by locking in better interest rates on your home financing. This may require you to refinance your home with a new loan that has better rates than before.
How to Get — and Maintain — Excellent Credit
Getting and maintaining credit requires implementing some strategic steps, which include:
- Paying your bills on time
- Keeping a low credit utilization ratio
- Diversifying your credit accounts
- Having a long credit history
Getting excellent credit can take anywhere from a few months to several years, depending on the state of your current credit score. There are multiple factors that go into your credit score, from how long you’ve had your credit accounts open to how much of your credit you use.
Maintaining a good credit score requires following the same steps you took to get excellent credit in the first place.
Pay your bills in a timely manner, don’t miss payments, avoid hard credit checks or bad remarks like bankruptcy, pay down your cards as much as possible to keep your credit utilization low, and make sure you have diverse accounts.
What to Do if Your Credit Rating Falls
Don’t panic if your credit rating falls. There are things you can do to bring it back up, including:
- Reviewing your credit report to note any inaccuracies requiring a dispute
- Amending whatever actions led to the decreased rate (like overages on your credit utilization)
- Consolidating and refinancing your debts so to make them more manageable
As a general rule, bad credit is a credit score between 560 and 650, fair credit is between 650 and 700, good credit is between 700 and 800, and excellent credit is 800-plus.
With the FICO credit system, your payment history accounts for a major percentage of your credit score, up to 35%. Your credit utilization ratio accounts for 30% of your credit score. The length of your credit history accounts for 15% and the types of credit you use account for 10%.
If your credit rating falls, take a look at these areas and figure out ways to improve.
Excellent credit, which is defined by a credit score of 800 or higher, comes with many advantages, from lower interest rates to better credit card programs. If you have excellent credit, you should see where you can take advantage of your credit in your everyday expenses, including your mortgage, insurance, and credit cards.