What can you do with excellent credit

There are ways to leverage your near-perfect credit score

For those who achieve an “average to excellent” FICO credit score (660 and above) or an “excellent” score (740 and above), there are many ways to take advantage of this achievement by opening new doors for opportunity and savings. As a real estate/financing professional, you can share these tips with your client base to bring value added and allow your clients to do further business with you. Here is some credit advice for those with great credit can take advantage of (but, you also must be aware of the potential downsides).

Transferring Credit Card Balances

Many credit cards can charge an exorbitant interest rate, and these rates coupled with debt can lead to large payments and wasted money. In fact, the average credit card debt in the US is currently over $6,500. Fortunately, those with great credit are eligible for a method to pay debt off rather quickly and easily. People with great credit should be eligible for a 0 percent interest rate on balance transfers, which essentially allows one to transfer credit card debt from a high interest card to a no interest account for a certain time period.

It’s important to consider few things before transferring a balance:

1. Transfer fees:

   Some of these cards will slap on a 3% fee for transferring balances, and you should make sure to find a card that doesn’t charge this fee.

2. Your average age of credit:

   Opening new credit reduces your average age of credit which will drop your credit scores. Do not open new cards if you plan on applying for a mortgage or loan within 2 years since scores may drop substantially after opening new credit. Make sure the cards you open are done strategically and not often.

Credit Card Upgrades

• High FICO scores will also make consumers eligible for the best credit card offerings. Many of the cards offered to those above a 660 score have better benefits, rewards, and perks unavailable to others. In addition, these cards often offer sign-on bonuses. Clearly if your scores are above a 740 the perks are even better. However, consumers have to make sure that they follow our tips when opening a new card in order to maintain their score (see the tips here) and should contact us with any questions.

Home Refinance

Those with great credit can also take advantage of historically low home interest rates. With a higher FICO score, many can lock in a much better rate for their mortgage. Even a small improvement in interest rates can lead to savings in the hundreds of thousands over the life of a mortgage.

Negotiating better interest rates or transfer offers with current credit cards

If you have existing cards and have excellent credit scores you can ask the creditor for lower interest rates or transfer offers on your existing cards. This is great if you don’t want to reduce your scores by opening new credit.

Requesting limit increases on current cards

The higher your credit limits the more leeway you have to charge without reducing your credit scores. Since balance-to-limit ratios on revolving credit (credit cards) must be under 10% for the best score increases, it is great to have high limits. Calling your creditor and asking for a limit increase can help your scores. The creditor will pull your credit reports and scores for approval so the scores can drop a little from the inquiry. If you have had many third party inquiries during the year it could drop scores significantly and it might be best to wait a year from the latest third party review.

Feel free to reach out to us if you have any credit questions or reports you would like reviewed!

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

Your credit score is a measurement of your overall financial health and creditworthiness. Because your credit is a key piece of your financial identity, it’s crucial to build good credit early on. While a poor score can make your biggest financial purchases more expensive, a good credit score can give you a competitive edge during lending decisions.

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Forbes Advisor outlines nine benefits of good credit below.

1. Lower Interest Rates

One of the main benefits of good credit is lower interest rates on your loans. When you apply for a loan, like a mortgage or credit card, a lender or provider typically uses your credit score to determine your interest rate. The lowest rates are reserved for applicants with the highest scores; applicants with lower credit scores typically receive higher interest rates.

To put this into perspective, the average estimated interest rates for personal loans based on VantageScore risk tiers, according to Experian, are in the table below. Please note that lenders determine and set an individual’s interest rate on a particular loan. The rates provided are estimations.

2. Improved Likelihood of Qualifying for a Loan or Credit

If you’ve been denied for a loan or credit card, you know how painful it is. It can be a hardship if you were denied financing for something you need, like a mortgage or a car. And it can be devastating if you’re not approved for other loans, such as private student loans that help many people afford college. But with a better credit score comes better approval odds. Of course, your credit score isn’t the only factor that lenders consider, but it is an important one.

3. Approval for Certain Jobs

Some jobs, such as those that work with money or in security clearance positions, require a personal credit check. This is to make sure that you’re capable of handling finances, or that you’re not vulnerable to bribery because of financial problems. If you have a poor credit score, you may not qualify for certain positions.

4. Larger Credit Card and Loan Limits

If you have a good credit score, you’ll be eligible for larger loans, such as the jumbo loans needed to take out a mortgage in some high cost-of-living areas. You may also qualify for higher credit card limits, too.

For example, according to a recent Experian study, the average Baby Boomer had a credit score of 731 and a credit card limit of nearly $40,000. But for younger Millennials, the average person had a lower credit score of 668 and a smaller credit limit of around $20,000. It’s worth noting that Baby Boomers have had more time to build up good credit since the length of credit history contributes to your overall score.

5. Better Credit Card Rewards

In addition to a higher credit limit, a better credit score also unlocks a wider variety of credit cards. Many of the best rewards cards require excellent credit for approval. This includes travel rewards cards that you can use to fully fund your vacations, and cash-back rewards cards that earn a percentage back on your spending.

6. Easier Approval for Rental Properties

Even if you never plan on buying a house, you’ll still need a good credit score. Many people don’t realize it, but your credit score is a factor that landlords take into consideration with your rental application. If you have a good credit score, you’re more likely to be approved as a tenant since a history of on-time payment behavior is likely to be more attractive to a landlord than someone with multiple delinquencies. If not, then you may have to pay a higher deposit, agree to a short-term lease or even be denied for housing outright.

7. Lower Insurance Rates

Good credit also can save money on your insurance. Insurance companies use your credit score when deciding whether to accept you as a customer and how much to charge you, even though some officials think this practice is unfair. According to an insuranceQuotes study, people with fair credit (a FICO score of 580-669) paid 39% more on their auto insurance premiums. People with poor credit (A FICO score under 580) had it even worse, paying 103% more.

8. Avoid Security Deposits on Utilities

A good credit score can be important when it comes to getting your utilities turned on, too. If you have a good credit score, providers are likely to switch on your utilities with a minimal amount of hassle. But if you have poor credit, they may require a deposit from you, or even have someone legally agree to pay your bill if you don’t, similar to finding someone to co-sign on a loan.

9. Negotiating Power on Loan Terms

Not only can you get lower interest rates with a better credit score, but you can use it as a bargaining chip in the mortgage negotiation process as well. To do this, you’ll need to prequalify and check your rate with multiple lenders. Then, you can take your rate estimate around to different lenders to see if they can offer you better terms, either by lowering the interest rate even further or waiving fees for the loan.

Bottom Line

Building and maintaining a strong credit profile is crucial as your credit score plays a key role in most lending decisions. If you happen to have a low credit score, take time to improve your credit score to prepare for any future loan or rental applications.

Raise Your FICO® Score Instantly with Experian Boost™

Experian can help raise your FICO® Score based on bill payment like your phone, utilities and popular streaming services. Results may vary. See site for more details.

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