What Are Seven Financial Perks of Maintaining Great Credit?
Imagine finding a secret weapon that saves you thousands of dollars every year. This hidden gem could greatly improve your finances, offering unexpected relief and boosting your savings. It's like discovering a key that unlocks big monetary benefits year after year. Join Ralph Estep Jr. as he talks about the power of great credit and how it can transform one's financial life. He explains how poor credit can cost listeners money through higher interest rates, denied loan applications, and fewer options for renting or buying a home. Ralph also outlines seven key Credit Score Hacks, including lower interest rates, higher chances of loan approval, higher credit limits, and Opportunities. Don’t let bad credit limit you—take charge and gain the financial freedom you deserve.
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Introduction
Ralph opens the episode by introducing the topic of the day: the importance of great credit and how it can save you money. He teases the audience with the promise of revealing a "secret weapon" that could save thousands of dollars annually. Ralph also recaps the previous episode, which focused on protecting oneself from identity theft online, emphasizing the importance of strong passwords.
Listener Question: Benefits of Good Credit
Kim from Boise, Idaho, writes in to ask about the benefits of good credit and the financial impact of poor credit. She expresses her struggles with improving her credit score and seeks advice on how better credit could benefit her financially. Ralph acknowledges the widespread nature of this issue and assures Kim and other listeners that the episode will break down the topic comprehensively.
Bible Verse
Ralph connects the topic of credit to a biblical perspective by referencing Proverbs 22:1, which speaks to the value of a good reputation. He likens a good financial reputation (credit score) to having a good name, suggesting that just as a good name can open doors, so can good credit.
Perk 1: Lower Interest Rates on Loans and Credit Cards
Ralph explains that one of the primary benefits of having good credit is access to lower interest rates on loans and credit cards. He illustrates this with an example of a $200,000 mortgage, showing how a lower interest rate for someone with excellent credit can save tens of thousands of dollars over the life of the loan. He emphasizes that good credit is like getting a VIP discount on borrowed money, ultimately keeping more money in one's pocket.
Perk 2: Higher Chances of Loan and Credit Card Approval
Good credit increases the likelihood of loan and credit card approval. Ralph describes the stress associated with waiting for loan approval and how having good credit can alleviate this anxiety. He highlights that good credit provides more options, reducing the need to resort to high-interest lenders. Good credit puts individuals in a stronger position when negotiating loan terms.
Perk 3: Higher Credit Limits
Ralph discusses how higher credit limits can benefit individuals, not by encouraging more spending, but by improving the credit utilization ratio, which is a key factor in credit scoring. He explains that higher limits can lower this ratio, potentially boosting one's credit score further. Additionally, having higher limits provides a financial safety net for emergencies, though he advises against using this credit for non-essential purchases.
Perk 4: Better Insurance Rates
In many states, insurance companies use credit scores to determine premiums. Ralph explains that people with higher credit scores often receive lower insurance rates because they are perceived as lower risk. This can lead to significant savings on auto, homeowners, and even life insurance. Ralph underscores this as a reward for being financially responsible.
Perk 5: No Security Deposits on Utilities
Ralph points out that good credit can help individuals avoid security deposits when setting up new utility services. He provides an example from a town in Delaware where poor credit could result in a $350 deposit for electricity. By maintaining good credit, individuals can keep this money in their bank accounts, which is particularly helpful when facing the expenses of moving to a new place.
Perk 6: Better Rental Options
Good credit can provide an edge in competitive rental markets. Ralph explains that landlords prefer tenants with great credit because it indicates a history of paying bills on time. This can lead to better rental terms, including lower security deposits and more favorable rent prices. He also notes that good credit is crucial for those aspiring to homeownership, as it affects mortgage approval and interest rates.
Perk 7: Better Job Prospects
Some employers, especially in the financial sector, check credit reports as part of their hiring process. Ralph acknowledges the controversy around this practice but emphasizes its reality. Good credit can demonstrate financial responsibility to potential employers, providing an edge in job searches, particularly for positions that handle money.
Costs of Poor Credit
Ralph shifts focus to the costs associated with poor credit. He reiterates that poor credit leads to higher interest rates, denied loan applications, and the need to resort to high-interest alternatives like payday loans. This can trap individuals in a cycle of debt. Additionally, poor credit can result in security deposits on utilities and fewer rental or homeownership options, ultimately costing more money over time.
Steps to Improve Credit
Ralph provides actionable steps for improving credit scores: paying bills on time, keeping credit balances low, not closing old credit cards, being cautious about opening new credit accounts, regularly checking credit reports for errors, and considering credit counseling if needed. He emphasizes that improving credit is a marathon, not a sprint, and requires patience and consistency.
Final Thoughts
Ralph recaps the benefits of great credit and the costs of poor credit, emphasizing how significant the financial impact can be. He reminds listeners of the importance of maintaining good credit and encourages them to implement the steps discussed. He concludes with a reminder that financial worth is not defined by a credit score and cites Colossians 3:23 to underscore the value of working with integrity.
