If you’ve been a little OCD about paying down your bills on time, your credit is probably on the healthy side. You shouldn’t have to be OCD about paying bills on time to get some satisfaction though, there are plenty of other benefits from keeping your credit healthy.
Having a healthy credit with excellent credit history can open up many perks, such as low-interest loans and attractive offers in the near future.
A less-than-perfect credit may still get you the personal loan that you need, but having a stellar credit health will help you save more money in interest charges over time!
Here are some awesome perks you can expect by having a first-rate credit health:
1) Better chance of loan and credit card approvals
It hurts to be rejected.
Even when it’s for a credit card or a personal loan. However, it is inevitable if you have a less than desirable credit health.
Having way too many credit cards, or constantly maxing out your limit, and being unable to pay your bills on time are all tell-tale signs that you have over extended your credit. Banks will usually not take the risk by granting you another credit facility when they see any of this happening.
Keeping your credit healthy will ensure you don’t see any rejection letters coming your way so keep your credit health on the good side!
2) Get approved for higher credit limits
Travelling abroad or perhaps in the midst of moving homes? You may need additional finances to cover any unforeseen expenses. In some situations, you just need a higher credit limit to get things moving.
People tend to think that having a high credit limit is bad but it’s quite the contrary given you’re able to be disciplined about your usage.
Your credit utilisation is related to your credit health as well. The lower the ratio of utilised credit over available credit, the better off you’ll be, hence having a higher credit limit will be easier for you to maintain a good credit health.
3) Better home loan package
One of the biggest and most significant rewards (in monetary terms) when you have healthy credit is the better mortgage deals you can get when you are buying a home.
In Malaysia, home buyers are able to get a maximum of 90% margin of finance for the first two residential properties they are buying. However, banks usually only grant 90% loan to those who have a decent credit health.
A good credit health means you are a prime customer to the bank, and hence they would also offer you an attractive interest rate for your loan. This applies not just to mortgage but also other loans such as a personal or car loan.
Here’s how much money you could be saving if you are offered a good home loan package for a RM500,000 property:
credit health |
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| Margin of finance | ||
| Interest rate | ||
| Down payment (upfront) | ||
| Monthly repayment* | ||
| Estimated total interest over loan tenure |
Based on the example above, a better package with lower interest rate and higher margin of finance means you don’t have to come up with too much cash upfront and you will be saving more in interest.
4) More negotiating power
Have you heard of the trick of negotiating with the banks on credit card annual fees? Or even negotiating a better interest rates to repay your outstanding amount on your card?
These are all possible, and you may even succeed in getting your requests granted if you have good credit health. Banks look at your history as their customer to determine whether you are a worthy customer to have.
A credit card annual fee can go up to more than a thousand bucks. However, if you have proven to be good in making payments promptly and are an overall responsible card holder or a borrower, you can request for your credit card annual fee to be waived, or your personal loan rates to be more attractive.
Having a good bargaining power means you have more room to shop around for a better financial product.
It’s not that difficult to maintain a good credit health. Even if your credit health isn’t good now, remember that you can always improve it as reports only go back a year. If you maintain good behaviour starting now, you can completely turn your credit health around in just a year’s time!
This means you can start making payments on time and put your finances in order before you apply for your next loan or card again.
With these four benefits to having an excellent credit health, you will be motivated to take charge of your financial health so you can reap the rewards in the future.
