8 benefits of having a good credit score

Your credit score is more than just a number — it's a reflection of your financial habits that credit lenders and even some landlords use to evaluate your reliability. This three-digit figure can influence everything from the interest rate on your mortgage to whether you qualify for your dream apartment.

Here are all the benefits of a good credit score.

1. Faster and simpler loan approval 

A key benefit of a high credit score is simply getting approved for further credit. Lenders use credit scores to gauge how likely you are to repay borrowed money, and a higher score signals that you've responsibly managed credit in the past, making financial institutions more confident in extending you new credit.

This applies across the board, from credit cards to personal loans to home equity loans. Borrowers with poor credit often face denials or are forced to seek out subprime lenders with less favorable terms and interest rates. But with a good credit score, you'll have access to mainstream lenders, competitive products, and the financial flexibility to choose the option that works best for your situation.

A good credit score won’t just better your chances of getting loan approval overall; it can also save you both time and money. Borrowers with strong credit histories often breeze through the approval process, with some lenders offering instant decisions for people with high credit scores. The underwriting process is simpler because your credit report tells a positive story that requires less verification.

On the other hand, applicants with poor credit may face additional documentation requirements, extended review periods, and more scrutiny overall. A good credit score helps to ensure you won't be stuck waiting while approval paperwork gets sorted out.

2. Lower interest rates

One of the most significant credit score benefits is access to lower interest rates on loans and credit cards. Lenders view borrowers with good credit as lower risk, which means they're willing to offer more favorable terms. When you have excellent credit, you become a valuable customer that financial institutions compete to win over. This puts you in the driver's seat when it comes to negotiating loan terms.

With multiple offers from different lenders, you can use competing rates to negotiate even better terms. You might negotiate a lower interest rate, reduced fees, or more favorable repayment conditions. This negotiating power is one of the most practical benefits of credit that many people overlook.

For example, on a $300,000 mortgage, a borrower with excellent credit might secure a 6.5% rate, while someone with fair credit could face 7.5% or higher. That single percentage point difference adds up to more than $72,000 in extra interest payments over 30 years. So, whether you're financing a home, buying a house with bad credit, or purchasing a vehicle, your credit score directly impacts how much you'll ultimately pay.

3. Higher credit limits

The advantages of good credit extend beyond approval rates and speeds — a good credit score also dictates how much you can borrow. Credit card issuers and lenders offer higher credit limits to borrowers they trust, and a strong credit history demonstrates that you can handle larger amounts responsibly without overextending yourself.

Higher limits provide greater financial flexibility for emergencies or larger purchases, which you can then regularly pay off; they also help your credit utilization rate (the percentage of available credit you're using) stay low, both of which further strengthen your credit score. If you're looking for a credit limit increase, maintaining good credit is the best way to achieve it.

4. Lower insurance premiums

Here's a lesser-known benefit of having a good credit score: in most states, insurers use credit-based insurance scores (essentially, a specialized version of your credit score that predicts insurance risk rather than loan repayment risk) to help determine your vehicle’s insurance premiums. A landmark study out of the University of Texas determined that those with the lowest credit-based insurance scores incurred around double the losses of those with the highest scores. 

Now, all but seven states allow the practice of using credit-based insurance scores to determine insurance premiums, meaning that your credit score may also factor into your auto insurance policies, and the higher your credit score, the better off you’ll be.

5. More housing options  

Landlords routinely check potential tenants' reliability through tenant screening services, and a good credit score signals that you pay bills on time and manage money responsibly — exactly what property owners want to see when they’re entrusting you to deliver regular rent payments.

With a strong credit score, you'll likely have access to a wider range of apartments in more desirable locations or buildings, and a good credit score could be the difference between getting your dream place or losing out to the other potential tenants applying for the lease you want.

Depending on the landlord and local housing market, they can also choose to lower your security deposit if your credit is good enough, or entirely waive additional requirements often imposed on higher-risk applicants (such as recommendation letters or a cosigner). If you're worried about getting an apartment with bad credit, know that improving your score can significantly expand your options.

6. Savings on utility and phone contracts 

Utility companies often check credit when setting up new accounts. With poor credit, you may be required to pay security deposits — sometimes up to hundreds of dollars or more, depending on where you live — before service can begin. Having a good credit score is more likely to get you a waived deposit and immediate service activation. But even if you have to pay a higher deposit due to low credit, these deposits should be refundable after a set period as long as you maintain on-time monthly payments.

If your credit is good and you’re signing up for a phone plan for the first time, your chosen phone carrier is less likely to push you toward a pre-paid phone plan, and you’ll get more premium features like international roaming, mobile hotspot access, or more affordable access to the latest device models.

Hefty utilities or phone deposits might still seem small compared to a bigger loan like a mortgage, but they’re no less vital to your everyday life. Between electric, gas, water, and phone services, customers with poor credit may find themselves putting down hundreds of dollars (or even up to a thousand or more altogether) just to establish basic utilities. Good credit sometimes eliminates these upfront deposit or activation costs by signaling lower risk to utility companies, keeping that money in your savings account where it belongs.

7. Better credit card rewards

The best rewards credit cards — those offering generous cash back, travel points, and exclusive perks — are typically reserved for applicants with good to excellent credit. This is the main benefit of having a very good or excellent credit score in the credit card world: access to premium products that can actually put money right back into your pocket.

Top-tier rewards cards can offer up to 6% cash back on purchases, sign-up bonuses worth hundreds of dollars or similar values in travel points, and valuable benefits like travel insurance and purchase protection. Cardholders with lower credit scores are often limited to basic cards with minimal rewards and higher annual fees and interest rates. Building good credit opens the door to cards that work for you, not against you.

8. Improved job prospects 

Some employers include credit checks as part of their hiring process, particularly for positions that involve big financial responsibilities or access to sensitive information, such as in financial firms and government agencies. While a potential employer won't see your actual credit score, they can review your credit report for red flags like bankruptcies or accounts in collections. And if they find red flags on your report, they’ll know your credit score likely isn’t much better, as items on your report determine your overall credit score.

A clean credit history demonstrates responsibility and can give you an edge over other candidates, making it yet another reason why a good credit score is important for your overall financial health and opportunities.

What is a good credit score?

Most lenders rely on FICO scores, which defines a good credit score as 670 or higher. But some lenders and credit institutions may use a VantageScore 3.0 or 4.0 instead or alongside your FICO score. A good VantageScore is generally defined as a “prime” score or above, meaning 661 or higher.

Here's a breakdown of both FICO and VantageScore 3.0/4.0 ranges:

FICO score ranges:

• Exceptional (800-850): Top-tier borrowers who qualify for the best rates and terms available.
• Very good (740-799): Above-average credit that qualifies for competitive rates from most lenders.
• Good (670-739): A good credit score opens doors to most financial products with reasonable terms.
• Fair (580-669): Below-average credit that may limit options and result in higher interest rates.
• Poor (300-579): Most common for new credit holders or people with severely damaged credit. These borrowers generally have more difficulty qualifying for credit products and may require secured cards or subprime lenders.

VantageScore 3.0 and 4.0 ranges:

• Superprime (781-850): The highest score that represents top-tier borrowers.
• Prime (661-780): Above average, still qualifies for competitive rates.
• Near prime (601-660): Below-average credit, lending options may be limited.
• Subprime (300-600): Borrowers in this range are likely newly opening credit accounts or actively working to repair credit after identity theft. Borrowers in this category may have difficulty getting loans.

How to improve your credit score

Building good credit takes time and consistency, but the payoff is worth it. Whether you're starting from scratch or recovering from financial setbacks, these proven strategies can help you improve your credit score and unlock the benefits. Here’s how to get there:

• Pay bills on time: Payment history is the single most important factor in your credit score, accounting for about 35% of your FICO score.
• Lower credit utilization: Aim to use less than 30% of your available credit — those with the best scores typically use under 10%.
• Avoid opening too many accounts one after another: Each application triggers a hard inquiry that can temporarily lower your score.
• Keep old accounts open: The length of your credit history matters, so maintain longstanding accounts even if you rarely use them.
• Check your credit reports regularly: Errors happen, and catching them early protects your score from inaccurate negative information.
• Pay down debts: Reducing outstanding balances improves your utilization rate and demonstrates financial responsibility.

Protect your credit with LifeLock

Your credit score represents years of responsible financial behavior, so don't let identity thieves undo your hard work. LifeLock monitors your personal information for signs of suspicious use, helping you detect credit fraud that could harm your score and your lending prospects. Plus, as a LifeLock member, you’ll be able to check your credit score monthly to ensure you’re still on track in your financial journey.

FAQs

How do credit scores work?

Credit scores are calculated using information from your credit reports, including payment history, amounts owed, length of credit history, credit mix, and new credit inquiries. FICO and VantageScore are the two main scoring models, with scores typically ranging from 300 to 850.

How long does it take to build a good credit score?

Establishing a credit score typically takes up to six months. However, reaching good or excellent credit scores usually requires several years of positive credit history, including on-time payments and low credit utilization.

Is there a benefit to having an 800 credit score?

Yes, an 800 credit score places you in the exceptional range, and generally, the higher your credit score, the better chances of qualifying for better loan and credit terms, such as lower interest rates and premium perks from credit lenders.

What can a 700 credit score do for you?

A 700 credit score falls in the good range and qualifies you for most credit products with competitive rates. You'll likely be approved for mortgages, auto loans, and rewards credit cards, though you may not receive the absolute best rates reserved for excellent credit.