Credit. For some, the word evokes feelings of fear and dread. Thoughts of damaged credit scores, high-interest debt, and endless minimum payments dance through their heads.
But what if I told you that, when used responsibly, credit can be an incredibly powerful financial tool that unlocks opportunities most people only dream of?
In this post, we’ll explore why excellent credit matters, the main benefits of good credit, and actionable tips for keeping your score above 780. Buckle up, because we’re about to unleash the power of credit!
Why Is Having Excellent Credit So Important?
“Credit is money.” –J.P. Morgan
Your credit score is essentially a three-digit summary of your financial identity. It shows potential lenders and creditors how responsibly you’ve used credit in the past.
The higher your score, the more trustworthy you look in the eyes of banks, landlords, employers, and more. But why does this trust matter so much?
Excellent Credit Saves You Money
The higher your credit score, the lower interest rates you’ll qualify for on credit cards, auto loans, mortgages, and other financing. This chart shows average interest rates by credit score tier:
| Credit Score | Interest Rate |
|---|---|
| 300-639 | 17.67% |
| 640-679 | 12.15% |
| 680-719 | 5.76% |
| 720-850 | 3.70% |
As you can see, moving from “poor” credit to “excellent” credit could save someone over 14% on interest!
On a $300,000 mortgage, that works out to $843 less per month in interest. Over 30 years, that’s over $300,000 in savings!
The bottom line? Excellent credit saves you substantial sums of money over your lifetime.
Excellent Credit Expands Your Opportunities
In addition to saving money, excellent credit unlocks opportunities that people with lower scores simply don’t have access to.
For example, many top-tier credit cards are only available to people with very good or exceptional credit. Cards like the American Express Platinum Card, Chase Sapphire Reserve, and Schwab Investor Card offer incredibly lucrative travel perks, rewards programs, and signup bonuses worth hundreds or thousands of dollars. But people with fair or poor credit won’t qualify.
Excellent credit also opens the door to 0% APR balance transfer offers, which can save you a fortune in interest on existing credit card balances you’re carrying.
Beyond the world of credit, excellent credit expands your rental housing options, improves your chances of landing jobs and promotions, and makes financing major purchases like cars much more affordable.
The bottom line? Excellent credit gives you access to financial opportunities, conveniences and privileges that simply aren’t available to the average person. It’s like having an all-access VIP pass in the world of personal finance.
What Are the Main Benefits of Excellent Credit?
Now that you see why excellent credit matters so much, let’s explore some of the main benefits it unlocks:
Low Interest Rates Save You Money
As discussed above, the #1 benefit of excellent credit is saving money on interest via lower rates. This applies to credit cards, auto loans, mortgages, personal loans, and more. Over your lifetime these interest savings really add up, potentially saving you hundreds of thousands of dollars.
Rewarding Credit Card Perks & Signup Bonuses
In addition to saving money, excellent credit scores (780+) qualify you for the most rewarding, perks-packed credit cards on the market. I’m talking lounge access, airline fee credits, generous travel and cash back rewards, and lucrative signup bonuses worth $500 to $1500+. Cards like the Chase Sapphire Preferred and American Express Gold take your lifestyle to the next level.
Higher Limits & Buying Power
The higher your credit score, the higher the credit limits and overall borrowing power lenders will extend. This gives you more flexibility to finance large purchases, cover unexpected expenses, take advantage of investment opportunities, and more without damaging your credit utilization ratio. Higher limits also indicate lower credit risk to future lenders.
Better Rental Housing Options
In competitive rental markets, excellent credit gives your rental application a major advantage. You look reliable and financially stable in the eyes of landlords, giving you the best shot at being approved for your desired unit. Decent credit often means paying extra security deposits and other fees.
Cheaper Insurance Premiums
Believe it or not, insurance companies look at your credit when pricing your premiums. Essentially they view good credit as an indicator of lower risk and responsible financial behavior. As a result, maintaining excellent credit over 760 can save you 10-50% on auto and home insurance premiums over your lifetime.
As you can see, building and keeping excellent credit unlocks tangible lifestyle upgrades and serious money saving opportunities. But how do you get there?
5 Steps to Reach an Excellent 780+ Credit Score
Reaching a 780+ credit score takes effort and discipline, but it’s completely achievable with the right strategy. Here are 5 steps anyone can take:
1. Check all three credit reports
The first step is pulling your full credit reports from Experian, Equifax and Transunion to understand exactly where your credit stands today. You can access these reports annually for free at www.annualcreditreport.com.
Analyze your reports to spot any errors, fraudulent activity, or opportunities to improve your score. Dispute any inaccurate information with the credit bureaus. Knowing your starting score and details is key.
2. Pay all bills early and in full
One of the biggest factors affecting your score is your payment history. To maximize this section, commit to paying all bills at least 5 days early, every single time. Set payment reminders if needed.
Also be sure to pay in full each month and avoid interest charges altogether. Carrying balances hurts your credit utilization ratio as well as accruing costly interest fees.
Perfect on-time payment history signals reliability as a borrower and directly raises your score over time.
3. Lower your credit utilization
Credit utilization refers to how much of your total available credit you’re using at one time. As a general rule, try keeping individual card utilization below 30%, and total utilization across all cards below 10%.
Request credit line increases with your issuer if needed to keep utilization low. Drastically lowering your utilization can boost your score by 50-100 points within a few months.
4. Only open new credit when needed
Every credit application triggers a hard inquiry on your report, which can lower your score, especially if done frequently. That’s why you should only open new credit cards or loans when absolutely needed based on your financial situation and goals.
Space applications 6-12 months apart whenever possible, and counteract them by continuing to demonstrate responsible credit management (steps 1-3).
5. Build credit history over time
While good habits raise your credit score at any age, nothing beats the positive impact of long, established credit history. Experts estimate credit history accounts for about 15% of your total FICO Score.
Simply put, the longer your accounts have been open and in good standing, the more positive data exists on your report, indicating lower credit risk and boosting your score.
Stick to the positive habits above, and your 780+ score will continue climbing over months and years.
“You can’t create experience, just endure it.” ― Albert Camus
Unlock Your Financial Potential with Excellent Credit
And there you have it – an in-depth look at why excellent credit matters so much, the key benefits it unlocks, and actionable tips for responsibly reaching and maintaining a score above 780.
By harnessing the power of strong credit, you set yourself up for long-term savings, rewarding lifestyle perks, financial flexibility and stability, and overall peace of mind. Your credit score impacts nearly all aspects of personal finance.
I encourage you to regularly check your credit, stick to positive habits that reduce risk, only borrow when needed, and be patient while your score climbs over time. With some focus and discipline, a 780+ score and all its benefits are well within your reach.
Now get out there, unleash the power of strong credit in your life, and unlock your full financial potential! The world is yours for the taking.
For more content, check out the following:
- Become Your Own Financial Advisor: A Comprehensive Guide to Taking Control of Your Finances
- The Benefits and Drawbacks of Paying with Cash vs. Credit Card: Which Should You Choose?
- Unleashing the Power of Credit: From Rock Bottom to Sky-High Success
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Note: This blog post is written by a professional trader and investor based on personal experiences and opinions. It is not intended as financial advice. Always conduct your own research and consult a financial advisor before making any financial decisions.
