Low Credit Score

Getting your first credit card could have brought you an immense joy as you are given pre-approved credit card just based on trust and relationship. You might have gone on a spending spree right after you had obtained the card without realising the impact of repayment aspect. A sudden medical emergency sprouts up, putting your finance at stake. There could be a lot of reason why your finance might have turned bad. However, none of the reasons matter to the creditors. What matters most to them is that how good is your three-digit credit score. Having a bad credit score can impact you negatively in various aspects especially in terms of credit-related activities. Following are some of the major impacts that a bad credit score can leave on your financial and personal life. 

Your credit score is assigned by the credit bureaus on the basis on information provided by your lenders regarding actions related to your credit cards and loans. Each action like application to a loan or card, to prompt payments on loans or credit card outstanding to the closure of the loan or cards, all of them affect your credit score.

Your loan application is rejected’- a message like this could bring a lot of disappointment especially when you need financial aid for an emergency. While there could be ways to get money, not knowing the reasons for the rejection could deter you from taking further steps to improving the chances of getting approved for your upcoming loan application.  

Credit score has taken an important place in the financial world off late. To be able to avail any kind of credit, a good credit score above 750 is essential. The requirement for credit could arise at any moment and a low credit score might have grave consequences of a loan rejection.  

Just like a good diet and fitness can give you great health, good credit score has beneficial effects as well. Some of them are quick loan approvals, lower rates of interest and other favorable terms on credit. And a bad credit score does just the opposite. Rejected loans, higher interest rate, etc may be some of the detrimental effects of a bad credit score.  

Jitesh Shah is a happy go lucky young media professional starting out his career in Mumbai. He was very ambitious and spent long hours at work and hung out with his friends during free time.  Financial matters did not seem important to him. He was regularly maxing his credit card, missing loans EMIs, and when he ran out of cash, he was quick to apply for another personal loan.  

A good credit score is a great asset to have these days. It comes in handy in all those situations when you need credit to buy anything that cannot be paid for immediately, like a home, vehicle or loans to tide over emergencies/unplanned circumstances or even for availing a credit card.  

The importance of credit score is known to all of us. Maintaining a good credit score is advantageous in a multitude of ways, like better chances of getting a loan/credit card approved at favorable terms, improved negotiation power, increased probability of getting higher amounts of loan, etc. 

Credit score has become an integral part of our financial well-being. To be eligible for any kind of credit, a good credit score is essential. But we are humans and it is natural for us to make mistakes. Sometimes, that might cost us our credit score. Once we get into the territory of bad credit scores, getting further credit on the best terms gets increasingly difficult.  

Credit Utilization ratio is one of the main components of a credit score. Your earlier score would have been calculated as per your existing credit utilization ratio. However, if there has been a consistent increase in your credit utilization ratio your credit score would have dropped down. Higher utilization is an indicator of poor credit habits.  

Do you remember when you checked your credit score for the first time? It must have been a joyous feeling of getting introduced to the credit world. Since checking your credit score, everyone would have a determined mind to increase the credit score. But over the period, things could have turned bad and a financial crunch would have been unavoidable.

Close to a million Indians join the workforce every year, not all are lucky to get jobs; but even those who do, run the risk of getting rejected on loans and credit cards due to a lack of information on credit score. Statistics say that 50% of the loan applications get rejected due to lack of credit score.

In India, banks consider a score of 700 and above a good credit score. The ideal score is one above 750. So, if you are looking to negotiate good terms on your loan it is best to have a score above 750. On the other hand, any score below 650 would attract a higher interest rate. Banks will take a stand and not negotiate to reduce the interest rate.

When a lender goes through a loan application, the borrower’s credit score is one of the important factors linked to the approval. The lenders want to be assured that the borrower has shown a decent repayment track record with no defaults in the past.

A good education gives wings to an individual to fly higher in the career. It is a stepping stone to achieve their ambitions in life. However, not all have the means to fund their studies from their own pockets considering the rising cost of education.

The main reason loans are popular or work is because of the time the loan is required. The quick approval loans or Insta-loans as some banks call them are there for the sole purpose of satisfying an emergency any person will have.

A bad credit may obstruct your chances of getting a loan to fulfil an urgent need. But there are ways where you can get an unsecured personal loan even with a bad credit.

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