4 ways in which a high credit score can save you money
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4 ways in which a high credit score can save you money

  • Highlights

  • Get lower mortgage and interest rates with a good credit score

  • Avail of money-saving rewards programmes with a high score

  • Good credit allows you to refinance loans at a more affordable rate

  • A high credit score lowers your insurance premiums

A good credit score can strengthen your position when you apply for a loan. A good credit score indicates to lenders that you’re a trustworthy borrower, and this could work to your benefit when it comes to being offered competitive interest rates and favourable loan tenors and terms. A good score can certainly get you financial opportunities that a bad score would drive away, but a little-known fact is that it can also help you save big in the long run. Here’s how.

1. Get a more affordable mortgage rate

Mortgages typically involve large amounts of money, and even the smallest difference in rate of interest can translate into a significant sum. A good credit score informs lenders that you’re more likely to make repayments on time, which in turn motivates them to offer you a lower rate of interest. The savings thus garnered on mortgage repayments can prove to be quite significant over a period of time—sometimes adding up to a few lakhs.

2. Refinance your loans to a lower interest rate

Refinancing loans is an option available to many borrowers—whether it is to consolidate multiple loans so you only need to manage one repayment per month or to avail of a lower interest rate with the existing or a new lender. As common as the practice is, lenders may at times be sceptical of your intentions when refinancing loans, but a good credit score is all the assurance they need of your ability to make payments on time. Being able to refinance your loans for a better interest rate could mean huge savings for you in the long term.

3. Make the most of credit card rewards programmes

All major credit card companies have rewards programmes to benefit top customers. From airline miles to cashback and points as well as exclusive offers on events, holiday bookings and more—these rewards programmes provide you with enough privileges that translate to serious savings. The better your credit score, the higher your changes of being privy to a rewards programme, not to mention a competitive interest rate!

4. Access better premiums on insurance

Insurance premiums are decided by various factors, but in essence they are based on probability. While the likelihood of a future mishap or emergency is one factor that issuers look at, they are almost equally swayed by the applicant’s credit score. A good credit score is a sign of financial discipline, which indicates, albeit indirectly, a lower risk for the insurance company. And subsequently, lower insurance premiums can add up to big savings for you.

A good credit score won’t just help you gain financial opportunities in the form of loans and credit card programmes—it could translate to serious long-term savings. So, whether or not you intend to avail loans or take new credit cards in the near future, a good credit score could take you and your finances a long way.

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