The 5 Biggest Benefits of a Good Credit Score

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You probably already know that your credit score is important when you apply for certain types of financial products like credit cards and loans. Lenders and credit card issuers use credit scores to help predict risk. The higher your credit score, the more likely you are to qualify when you apply for financing. 

Yet the benefits of a good credit score could go far beyond the ability to qualify for more credit cards and loans. Having good credit offers other perks that you might not realize exist. Here’s what you need to know to start putting your good credit score to work for you.

What Is a Good Credit Score? 

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FICO® Scores range from 300 to 850. In general, a FICO score of 670-739 is considered a good credit score. FICO Scores that range from 740-799 fall into the “very good” category. Finally, the top category of FICO Scores (800-850) are classified as “exceptional” or "excellent." 

According to the credit bureau Experian, 67% of American adults have a good FICO Score or higher. And as of April 2023, the average FICO Score in the United States was 718. 

1. Lower Interest Rates

A good credit score not only makes it easier to qualify for credit cards and loans, but it could help you qualify for more attractive financing offers as well. In general, lenders and credit card companies reserve their lowest interest rates for well-qualified applicants (aka those with higher credit scores, low debt-to-income ratios, etc.). 

You typically don’t need a perfect credit score to qualify for the best deals that credit card issuer and lenders have to offer. But with good or excellent credit, you’re more likely to be eligible for a wider variety of financing options—including 0% APR credit card offers and premium credit cards if you’re interested in such products. 

2. Higher Credit Limits

When you qualify for a new credit card, the card issuer may also review your credit score to determine how much money it’s comfortable allowing you to borrow at a given time (aka your credit limit). A good credit score could give you access to higher credit card limits. Bad credit, by comparison, could limit your access to financing. 

On a positive note, if you start out with credit cards with lower limits you can work to improve your credit scores. If you’re successful, you could come back and ask your credit card issuer to increase your credit limit in the future. 

3. Better Credit Card Offers and Loans

Credit card companies and lenders commonly set criteria that applicants must meet to borrow money. Satisfying a minimum credit score is typically part of the process. 

For example, the best travel rewards credit cards often require applicants to have a good credit score (perhaps an excellent credit score) to be eligible for a new account. There are credit cards for bad credit, but these accounts don’t tend to have the same generous benefits and features. 

Recommended Travel Credit Cards

Credit Card	Intro Bonus	Annual Fee	Rewards Rate	Learn More
Chase Sapphire Preferred® Apply Now	60,000Chase Ultimate Rewards Points More Info Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. Dollar Equivalent: $1,380 (60,000 Chase Ultimate Rewards Points * 0.023 base)	$95	1x- 5xPoints More Info The card offers 5x points per dollar on Chase Travel℠, 3x points on dining (including eligible takeout and delivery services), as well as 3x points on select streaming services and online grocery purchases (excluding Target, Walmart and wholesale clubs). This card earns 2x points on all other travel spending and 1x point per dollar everywhere else. Chase broadly defines travel to include not just airfare, hotels and rental cars, but expenses like parking, tolls and public transit too.	Apply Now
Southwest Rapid Rewards® Plus Credit Card Apply Now	50,000Southwest Rapid Rewards Points More Info Earn 50,000 bonus points after spending $1,000 on purchases in the first 3 months from account opening. Dollar Equivalent: $700 (50,000 Southwest Rapid Rewards Points * 0.014 base)	$69	1x - 2xPoints More Info Earn 2X points on Southwest® purchases. Earn 2X points on Rapid Rewards® hotel and car rental partners. Earn 2X points on local transit and commuting, including rideshare. Earn 2X points on internet, cable, and phone services; select streaming. Earn 1X points on all other purchases.	Apply Now
Citi Custom Cash® Card Apply Now Rates & Fees	$200Cash Bonus More Info Earn $200 in cash back after you spend $1500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® points, which can be redeemed for $200 cash back.	$0	1% - 5%Cashback More Info Earn 5% cash back on purchases in your top eligible spend category each billing cycle, up to the first $500 spent, 1% cash back thereafter. Also, earn unlimited 1% cash back on all other purchases. Special Travel Offer: Earn an additional 4% cash back on hotels, car rentals, and attractions booked on Citi Travel℠ portal through 6/30/2025.	Apply Now Rates & Fees
Citi Premier® Card Apply Now Rates & Fees	60,000Citi ThankYou Points More Info Earn 60,000 bonus ThankYou Points after making $4,000 worth of purchases during the first three months of account opening. Dollar Equivalent: $1,080 (60,000 Citi ThankYou Points * 0.018 base)	$95	1X-10XPoints More Info 10X total ThankYou® Points per $1 spent on hotel, car rentals and attractions (excluding air travel) booked on the Citi Travel℠ portal through June 30, 2024. 3X -- Earn 3 Points per $1 spent at Gas Stations, Air Travel and Other Hotels 3X -- Earn 3 Points per $1 spent at Restaurants and Supermarkets 1X -- Earn 1 Point on All Other Purchases	Apply Now Rates & Fees

Other lenders may also use credit score minimums to screen loan applicants. The best personal loans, for example, are typically only accessible if you have a good or excellent credit score. And the same rule applies to mortgages. The minimum FICO Score you need for most conventional mortgages is around 620. However, lenders that issue government-backed home loans, like FHA loans and VA loans, may accept borrowers with FICO Scores of 580 or lower. 

4. Lower Insurance Premiums

Another perk of good credit that many people overlook is the potential to save money on your insurance rates. In many states, the price of your car insurance and homeowners insurance may go up or down based on your credit score. 

Many insurance companies use credit-based insurance scores to assess risk when providing quotes to potential customers. Your credit information can help an insurer determine the likelihood that you’ll file a claim in the future—a claim that could cost the insurance company money. 

Insurance companies place a lot of trust in the predictive power of credit scores. You might have a completely clean driving record. However, if you have a bad credit score, you could still pay a higher insurance rate than you would otherwise. One study found that a bad credit score could add an average of over $1,300 per year onto the cost of car insurance premiums for drivers in Kansas, and a staggering $3,826 for insured drivers with bad credit in Florida.

5. More Housing Choices

Whether you decide to rent an apartment, lease a home, or apply for a mortgage, your credit score is likely to come into play in each scenario. Landlords and property managers typically review the credit history and credit score of prospective renters. Likewise, if you purchase a home, a thorough review of your credit reports and scores will be part of the mortgage application process.

Good credit can make securing housing easier and more affordable whether you decide to rent or buy. Down payment and security deposit requirements are often lower for applicants with higher credit scores. Plus, you’ll need to satisfy minimum credit score requirements to qualify for a mortgage or to lease an apartment in the first place. 

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Next Steps

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Good credit can save you money and make your financial life easier to navigate in many ways. So, if your credit score isn’t as strong as you would like it to be, it’s in your best interest to take action.

If you want to improve your credit score, a great place to start is to check your credit reports from Equifax, TransUnion, and Experian. As you review your credit reports, make a note of any incorrect or questionable information you find. You can dispute errors on your credit reports thanks to the Fair Credit Reporting Act.

Another possible way to boost your credit scores is to pay down your credit card debt. This smart financial move can also help you save money on credit card interest. 

Depending on your situation, the changes above (and others) may not help you recover from a credit catastrophe immediately. Just like getting back into a workout routine, credit tends to improve in an incremental fashion—little by little. Still, as you make progress toward a better credit score, you may start to enjoy more and more of the benefits above over time.