Credit scores, as some observers have pointed out, are like adult GPAs. Like a good GPA, a good credit score unlocks opportunity — sometimes in surprising ways.
"Credit scores are used for a lot more reasons than people realize," Rod Griffin, director of consumer education and awareness at Experian, tells CNBC Make It.
Experian, along with Equifax and TransUnion, is one of the major credit bureaus that collects your financial data. Agencies like FICO and VantageScore then use their reports to issue your score.
FICO scores range from around 300 to 850. If you have a score of 700 or above, you're considered prime and will typically qualify for a loan. An excellent score of 750 or above will get you the best rates. Anything below around 650 is considered problematic.
"Understanding how credit reports are used will help [people] save money and help them be more financially successful," says Griffin.
While many of the perks of a high score, such as good loan rate, are well-known, others are taken advantage of less often. Here are four benefits of a high credit score Griffin says are overlooked.
1. Lower security deposits
When you shop around for a new apartment, expect a credit check, especially if you're dealing with a larger management company. "Generally, when you're applying for a lease, there will be a tenant screening report and they'll look at your credit score," says Griffin.
"If your background as a borrower does not inspire confidence from a landlord, he or she will likely try to offset some of the perceived risk by requiring more collateral. That means a bigger security deposit – perhaps two months' rent instead of one," writes Odysseas Papadimitriou, CEO of WalletHub, in RENTCafe. A lower score will also mean fewer apartment options.
Similarly, your credit score can determine the deposit you pay for a utility service, notes Griffin. The company that provides your home with water, electricity, gas or cable may end up charging you more if they don't trust you because of a low score.
2. Lower insurance rates
Your credit report can affect your insurance rates, too. "Insurance for your car or home may also be reduced if you have good credit scores," says Griffin.
The exact score insurance companies use, sometimes referred to as your "insurance score," differs from the score banks and lenders issue. "Insurance companies will use scores that help them predict the likelihood that you'll make a claim," says Griffin.
However, all of your scores reflect information from the same credit report and, although they may vary slightly, they are usually in the same ballpark.
3. Access to the best cell phone deals
If you have poor credit, you may be required to make a large down payment when you purchase your phone, Griffin says. You could also miss out on favorable deals only available to "qualified customers" with good credit.
For example, last month Apple unveiled their latest iPhone Xs. Customers can either pay for one of the phones upfront or enroll in the iPhone Upgrade Program, which lets you pay off your phone monthly with the option to upgrade again after 12 months. The program is only open to those with credit scores high enough to qualify.
4. Access to the best credit cards
"Good credit scores can also help you qualify for credit that offers other perks you might find valuable," says Griffin. "Credit cards can offer cash back, airline miles, purchase discounts or lower fees, but you may need strong credit scores to qualify."
Indeed, whether you're looking for a luxury travel card, one that will maximize cash back or even one to help you get out of debt, the best cards tend to require scores in the good-to-excellent range. Once you qualify, a better score will also get you a lower annual percentage rate (APR).
So Griffin recommends checking your credit report. If there's room for improvement, save time and money by increasing your score. Your report includes payment history, how much you owe, your length of credit history, the types of credit you have and how often you apply for new credit.
If you're like most consumers, raising your score could simply be a matter of consistently paying your bills on time and keeping your balances low. "Everything else," Griffin says, "builds on those two factors."
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