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The credit bureaus generally indicate that a good credit score falls between 700 and 749 on a scale of 300 to 850. Having good credit makes it easier for you to get a favorable interest rate when you apply for a loan, get approved for a credit card, get easy approval from a landlord, and even sometimes avoid security deposits. But good credit can do more things for you too. Here’s how to use good credit to make money.
- A good credit score allows you to save money and improve your overall financial position.
- Find ways to get the most out of credit card rewards and bonuses.
- With access to better credit card and loan rates, you could invest your savings to help build your net worth.
- Good credit can make you eligible for credit card offers such as sign-on bonuses, cash back, travel points, airline miles, gift cards, and discounts on certain purchases.
- If you have good credit, you can become a homeowner and reap the rewards of a regular monthly payment, building your credit, and building equity.
Apply for Good Credit Cards with Rewards
Good credit can help you qualify for credit cards with significant bonuses. Many credit card companies offer perks such as:
- Sign-on bonuses
- Cash back
- Travel points and airline miles
- Gift cards
- Discounts on certain purchases from merchant partnerships
But as with any credit card, it is essential to read the fine print and know what you are signing up for. Some credit cards have annual fees. So make sure you weigh the value you will get from the credit card against any annual fees and the APR (annual percentage rate).
You should also know that applying for new credit cards can boost your credit score. Conversely, too many credit inquiries can be damaging to your score. So, be selective in what you apply for. And keep your balance to credit limit under 30%. Having a high credit balance can hurt your score.
Become a Homeowner
The freedom to own your own home is a part of the American dream. And if the time is right for you, why not consider buying a home? A good credit score can help you qualify for a mortgage with a favorable interest rate. Further, home ownership provides many benefits, such as:
- The ability to control your monthly house payment
- Building equity in the home with each payment
- Seeing the value of your home rise over time (appreciation)
- Being able to convert your equity into cash in the event of an emergency or for home improvements
- Building your credit
The list goes on and on. But one of those benefits mentioned above is a significant one - building equity in your home with each payment. Every time you pay your mortgage bill, a percentage of your payment goes towards your principal balance, driving down the amount you owe on your home. And if and when the time comes to sell your home, you can capitalize on that equity you have built.
Purchase an Investment Property
One of the best ways to to be your own boss is purchasing an investment property. If you can do so, consider using your good credit score to qualify for a mortgage on an investment property. Investment properties can generate a pretty penny for you over time. Not only that, but you may also experience the following benefits:
- Steady cash flow (your income each month on the property should be higher than the amount you invest for maintenance and operations)
- Great returns (appreciation) when the housing and property management market is stable or growing
- Long-term security
- Tax benefits since you can deduct many expenses associated with investment property ownership. Typical deductions include property taxes, mortgage interest, management fees, property insurance, ongoing maintenance costs, property repairs, and even the money you invest to market and advertise your property to potential renters.
- Protection against inflation
- Fulfillment, control, and satisfaction that you are providing homes for renters or bringing businesses to market that benefit the local community
Start a Business
The benefits of being your own boss can be pretty lucrative. And if you want to start a business, you can leverage your strong credit score to get a credit card or small business loan that can help you kick off the process and get your idea off the ground. Of course, no business is guaranteed to be successful, and it can take two to three years to become profitable.
But, if you have a skill, service, or product that can provide long-term benefits to your local community or the world, starting a small business is a great way to leverage your good credit to make money.
Take Out a Personal Loan with a Competitive Rate
Your good credit can work for you in so many ways. Good credit can help you qualify for personal loans with competitive rates. When you have a good credit score, lenders feel you are less risky. They feel more confident that you will be able to pay back the borrowed amount and any interest you have accrued.
And this is a bit of a puzzle. The fact is that loan companies want your money, and they want to make money off of you. But they also want to ensure you can pay them back. If you default on your loan and it goes into collections, your credit score will not only tank, but they’ll lose money on the deal.
This all said, here are just a few ways that you can use a personal loan to make money:
- Invest in the real estate or stock market
- Start a business venture
- Flip houses for profit
- Consolidate your debt
Put Your Savings to Work
When you leverage your good credit the right way, it can save you oodles of money. But why not keep those savings working for you for the long term? Good credit can help you purchase a better car or get more lucrative home insurance rates. And as you know, one of the most significant benefits of a good or excellent credit score is that you can get lower credit card and loan interest rates.
That savings can help you generate more income. Here are just a few examples of common investment options:
- High-yield savings accounts
- Individual or dividend stocks
- Mutual funds and index funds
- Certificates of deposit (CDs)
Having good credit can not only make you money but can save you money too. Understanding how to use good credit to make money is a key to financial success. So why not get started with some of the recommendations we provided? You’ve worked hard to build your good credit. Now is the time to let that good credit work for you.