3 Little-Known Perks of Having a High Credit Score

3 Little-Known Perks of Having a High Credit Score

Having a high credit score might not buy you happiness. But it sure can make your financial life easier -- in some cases, a lot cheaper, too.

Most credit score models range from 300 to 850, with scores 740 or above considered very good. If your credit score is above 740, you meet the score requirements to qualify for most loan products and credit cards. Although approval is based on numerous factors -- not just good credit -- having a high credit score can at least get your foot in the door for many of the best credit cards.

Qualifying for loans and credit cards is a high-score perk that many people know about. But when you start to look at all the benefits of having a high credit score, it's astonishing how much a three-digit number can save you money and set you up for financial success. Below, we'll look at three little-known perks of having a high credit score.

1. You can save on insurance

Many insurance companies use credit scores to determine your premium. Although the practice is controversial (and illegal in California, Hawaii, and Massachusetts), it's common for consumers with high credit scores to have cheaper car, home, and life insurance policies.

The price difference can be substantial, too. In 2023, drivers with excellent credit paid $1,947 for car insurance, according to The Motley Fool Ascent's car insurance research. Meanwhile, drivers with poor credit paid about $4,145 for auto insurance. That's roughly $2,200 more than drivers with excellent credit and $1,128 more than the national average.

Check out our list of the best car insurance for good credit to see which insurers may offer the best rates.

2. You may be able to rent a home more easily

When you're applying for a new apartment, most landlords will check your credit during the leasing process. If there's fierce competition among renters in your target market, a high credit score could make your application stand out.

Of course, a high credit score doesn't guarantee you'll win the space. Landlords also look at income and, sometimes, cash reserves. For example, a few years back my wife and I were thinking about moving to San Diego. We applied for an apartment in a highly competitive area.

We were told by the broker that our credit profiles were exceptional (we both had 800-plus credit scores), which made us think we were going to get it.

The next week, the same broker told us another renter had put down a full year's worth of rent (over $25,000) and had gotten the apartment.

At any rate, having a high credit score will make it easier for a landlord to approve your application, especially if your annual income matches its requirements.

3. You can skip the security deposit on utilities

Paying your bills on time factors highly in determining your credit score. Because of this, utilities companies will often look at your credit history when you apply for new services.

With a high credit score, you make it easy for them to turn on your electricity or water without much hassle. Conversely, with a low score, you might have to put down a security deposit to reassure them of your commitment to pay.

Again, this isn't a hard-and-fast rule. For example, I had to put down a security deposit for my utilities when I rented an apartment in Florida. This really surprised me, since my credit score wasn't lower than 760. The deposit wasn't high (I think it was less than $100), but I had to put it down nonetheless.

Moral of the story:A high credit score can certainly set you up for financial success. But credit scores aren't the only factors that lenders, landlords, insurers, and utility companies scrutinize. It certainly doesn't hurt to improve your credit -- especially if you're applying for the best rewards cards -- but don't obsess over it if your credit is good enough.

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