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Benefits of a Good Credit Score

Lower Interest Rates

When you first provide your information for your credit card application, your respective bank will offer you an interest rate that is based on previous credit scores. Interest rates are one of the factors that influence your monthly repayments and a bad credit score can result in hefty rates which contribute to an even larger monthly repayment. However, a good credit score can encourage your bank to offer you lower interest rates on your monthly repayments. Not only will this eliminate the added pressure of an extra fee, but it will also assist you in ensuring the timely repayment of any debt.

Higher Chance of Loan Approval

There comes a time when everyone aspires to own their own home, send their children to university or pay for a once-in-a-lifetime holiday. There are few people who can afford to turn these dreams into a reality without financial assistance. However, for the rest of us, with the help of a personal or home loan, these dreams and aspirations are quite plausible. A good credit score will yield a higher chance of loan approval while a negative score leads the bank to believe that you’re not reliable. Keep your future in mind and opt to pay off your credit card debt.

Approval on Higher Credit Limits

Did you know that your borrowing capacity is based on your income as well as on your ability to repay debt that is owed to your financial service provider? If you are able to repay your credit card debt in a timely manner, it is possible that your bank will increase your credit limit. It is important to treat this increase as an appointed fund for emergencies or ‘rainy days’. Otherwise, you might just get yourself into a trap and erase your existing credit score.

Understanding the importance of a good credit score can motivate you to pay off your credit card debt and aim for a positive score that can one day assist in making your dreams come true.