A credit score is used by most lenders to measure a potential borrower’s financial health. With a good credit score, it becomes easier for one to get a loan with a favorable interest rate, get approval from the landlord, get approved by a credit card company, and in some cases avoid security deposits. This article explains how you can make money with your credit score.
How to Make Money With Your Credit Score
When you have a good credit score, you can use it to your advantage and make money in different ways. For instance, good credit can help you apply for a credit card that comes with rewards. Some credit card companies offer sign-on bonuses, gift cards, airline miles, travel points, discounts on specific purchases, and cash back. You can use these rewards to generate cash, but you should read the fine print before signing for a new credit card.
A good credit score helps you qualify for a loan to buy a home. Once you become a homeowner, each payment you make toward loan repayment contributes to the growth of equity in the home. This equity can be converted into cash in case of emergency. Additionally, you can generate passive income from rentals generated from your home. Another good thing about buying a home is that its value will appreciate over time. When you decide to sell your home at some point, it will fetch a better price.
Purchasing an investment property is another noble way to become your boss. Having a good credit score helps you qualify for a mortgage to buy investment property. This kind of investment offers the following benefits:
- Steady Income
- Hedge against inflation, which means that property value appreciates, and you can later sell it at a higher price.
- Tax benefits like deductions.
Another benefit of having a good credit score is that it helps you qualify for a business loan. Although it is not guaranteed that your business will succeed, a small business loan can kick-start your journey to prosperity in the long run. It can take up to three years for your venture to be profitable.
A good credit score allows you to get a personal loan at a favorable rate. This will help you save money when you repay the credit. You can use the money saved for other purposes.
What Is Better a Credit Card or a Loan?
First and foremost, you should know that both a credit card and a loan are debts that come with interest. When you apply for a loan, you will get a fixed amount that is paid back in installments including interest and other repayment terms, which you should understand. A loan is good, especially if you want to make a big purchase because you will get a lump sum.
On the other hand, a credit card provides flexible borrowing where the cardholder can access funds up to a certain credit limit. A credit card is ideal for daily expenses, smaller purchases, monthly bills, and other expenses you can pay off each month. A credit card acts like a revolving credit where you can continue accessing funds as long as you do not exceed your limit. You also need to repay the money at the end of each money. In other words, you will never run out of money to spend when you use your card wisely. However, a credit card comes with higher interest than a personal loan or other fixed types of credit.
Determining what is better a credit card or loan is a matter of personal preference. If you have financial discipline and are capable of managing your spending, a credit card can be ideal. However, if you want to cover a big purchase, a loan may be suitable. Whatever you choose between a credit card and a loan, you should know that they are both debts. Lenders are in business, so they charge interest on money borrowed. Therefore, you should only borrow money when you need it.
How to Use Credit to Your Advantage in South Africa?
Having a credit card in South Africa comes with several advantages. It is convenient since you will always have cash on hand to cover immediate needs if you spend within your limit and make monthly payments. With a credit card, you will also get cash advances to increase your buying power. However, you should be careful because this option comes with higher interest rates.
Some credit cards come with member perks such as discounts and bonuses. When you make timely payments, a credit card will help you build a good credit score, which gives you access to different financial products. This will help you qualify for low-cost loans if you want to purchase something big in South Africa.
How to Benefit From Credit Cards in South Africa?
When you use your credit card responsibly, you can control your spending, and you will never run out of cash to cover your daily needs or monthly payments like bills. When you stay within your limit and make timely payments, you can request a balance increase from your lender. This will help you make bigger purchases like furniture.
Additionally, a credit card comes with many perks including UCount rewards, reward points on fuel purchased, and reward points on other purchases. It is convenient since you can use it at any time. More importantly, a credit card is the number one credit score builder. You can build a healthy credit score if you maintain timely payments every month. This will help you access affordable loans if you want to purchase something big.
Having a good credit score can make you save money and make cash in different ways. Understanding the measures you can take to utilize your credit score to make money is crucial to financial success. These tips can go a long way in helping you realize the secret that can help you generate more money by having good credit.
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