What is Credit Score and How It Impacts Your Life?

by MyMoney Mantra FinTech (Financial Technology)

How trustworthy are you to your lenders? Do you have a satisfactory financial history? This is determined by your credit score. Your credit score is a depiction of your credit repayment history, which is represented by a three-digit number. It can be anywhere between 301 and 850. Higher the number, better is your score and higher is your trustworthiness to lenders. A lower credit score may act as a hindrance in borrowing from banks.

Credit scores help banks evaluate your credit repayment behavior and analyze how you will treat their credit line in the future. Credit bureaus compile your score as well as all the factors that determine your credit report. Your repayment history is the most important factor considered by lenders. Paying all your dues on time always will help you get a good credit score.

A good credit score impacts your life and your financial future in many ways, such as:

1. Availing Loans

It isn’t a surprise if you opt for a loan at some point in your life. Irrespective of what type of loan you apply for – Business Loan, Home Loan, Personal Loan, etc. a good credit score helps you easily obtain it. Lenders reject applications with bad credit scores. Improve your credit score over time and thereby enhance your borrowing capabilities.

2. Interest Rates on Loans

Higher your credit score, better are the interest rates offered by banks on loans. If you are planning to obtain a loan on lower interest rates, improve your financial repayment history.

3. Higher Limits on Loans

If you have a good credit score, applying for higher limits of the loan becomes easy. Risks are but part of life! Meeting a financial emergency at some point in your life may require you to buy a loan. At that point in life, your credit worthiness will help you obtain a loan easily. Higher limits on any loans get easily approved if your credit score is satisfactory.

4. Employment Opportunities

With competition going fierce and increase of the number of qualified job seekers, employers do check the credit scores of their prospective candidates. This practice has been aggressively followed at the international level. And India is no far behind! Bad credit scores would only mean high debts which may affect performance levels at the office. Higher your credit score, better are your chances of getting recruited without hassles.

5. Fast Approval of Credit Card Applications

A Credit Card changes the way one pays for things. Good credit score isn’t a risk for lenders, thus facilitating fast approval of Credit Card applications. If you have a past bad repayment history, your application may get rejected.

6. Seeking Overseas Job or Studying Abroad

Whether you are applying for a job or admission in an overseas university, banks there do consider your credit score, especially if you are applying for a loan or credit card. The United Kingdom and the United States of America diligently consider credit reports before approving one. Hence, before you plan for it, ensure that you have a good credit score.

Also Read: Do You Have an Excellent Credit Score But Refused a Business Loan?

If you are in need of any financial assistance for improving your personal or professional life, visit www.mymoneymantra.com, a leading online financial services marketplace or call our Loan Specialists toll-free at 1800 103 4004.