5 Impacts of credit score that you may not know
The credit score is a score normally ranging between 300-900, which is calculated based on credit-related transactions. By credit transactions, we mean payments to credit cards and settling EMIs. Banks and financial institutions lend financial products like loans or credit cards, based on the individual’s credit score. The credit score for banks indicates your creditworthiness and will help them to predict your repaying capability.
Usually, a credit score of 750+ is considered as a healthy score for loans. It can fetch you access to a significant number of financial products. Wondering what your credit score is? At sites like Fincover, you can check your credit score for free. Your credit score can impact many things in life – from availing loans to credit cards or even securing a job. In this post, we will discuss the impacts your credit score has on your lives.
1. Availing a Home Loan
Are you interested in realizing the goal of your life in buying your dream home? Most of us have to rely on bank loans or loans from other NBFCs to buy or dream homes. That being the case, It’s good to know your credit score beforehand if you plan to avail a loan. A low credit score means your loan request might get rejected and will also hamper your prospects of availing a loan. Most banks expect a credit score above 750 to qualify you for their home loans. In the event, your credit score is below 750, make every effort to improve your credit score by settling your existing dues and contacting the agencies.
2. Availing Business Loan
Startups are becoming a rage. Not every entrepreneur is fortunate enough to find a venture capitalist to fund his dream startup. Most of them rely on bank loans for their startups or expanding their existing businesses. In that case, a credit score of less than 750 will seriously hamper their chances of availing a business loan. A par credit score will ensure they can negotiate terms with the bank for a better deal.
3. Credit Card
Suppose you do not have a valid license at the time of the accident, the bike insurance company will instantly reject your claim. Driving without having a license is a severe offence. So, ensure you have your license at all times when you are driving. If the license is nearing its expiry date, ensure you renew it before the expiry date.
4. Car Loan
Just like home loans, banks or NBFCs do check your credit history before sanctioning loans for cars. If your credit score is low, your loan application will get rejected. Applying through multiple channels will indicate that you are credit hungry and will further fetter your chances of availing a loan in the future.
If you are looking out for a new job, make sure you update your credit score in your resume. Most companies these days check the credit score of the candidate before giving the appointment order. A bad credit history indicates that the candidate is not right in managing his finances and will ultimately lead to rejection, no matter how good he/she performed in the interview.
So, there’s a lot more than what meets the eye. Having a good credit score gives you several advantages. However, if you have a bad credit score, you don’t have to get disheartened. There are several ways to improve it. Focus on improving your credit score by paying your dues on time and be a moderate spender.