Skip to main content

WHAT ARE THE PITFALLS OF IGNORING THE CREDIT SCORE?


Nowadays, our daily lives are increasingly dependent on credit solutions which are used for wide variety of personal and business need as many banks and NBFCs offer numerous loan schemes to entice their customers. There is an army of people who "Apply For Loan" to fund their needs and to get rid of financial crunch.

A good credit score is the key thing to avail any kind of loan and score between 750-900 can help you in numerous ways. Therefore, ignoring the most significant component of this lending process can leave you high and dry. In this blog post, we will discuss about the pitfalls of ignoring the credit score and how badly it stings you. Let’s find out these setbacks:

  • Limited choice of lenders: Most of the lenders prefer to sanction loans only to those who have a credit rating of above 750 as it considered being a good score in the lending sector. Any individual whose credit rating is poor would be considered as someone who is not disciplines with his repayments and this lowers his/her chances to get loans from the reputed lenders for financial aid.
  • High interest rate: A bad credit history can ruin your chances of getting the loans. In case, you get enable to secure a loan but low credit score results in high loan cost in terms of interest rates as the lending institution would charge you higher rate of interest on the loan resulting in increased debt burden. However, someone with a good credit score doesn’t need to worry about high ratio interest rate.
  • Little or zero negotiation power: It would be great drawback of having a poor credit history as it destroys the chances of negotiation on interest rates with lenders and you may end up in accepting the terms imposed by the lender. A person having high CIBIL has variety of options and he/she is in a better situation to bargain over the interest rate and other terms and conditions.
  • Cap on the loan amount: Well, poor credit rating reflects you as a bad borrower who is not regular with his repayments or EMIs. This thing puts the lender in risk to trust you with higher loan quantum. Hence, you might end up getting the lower amount or in case, you get succeeded in securing desired amount then you would be charged with higher rate of interest.
  • Higher insurance rate: It is an important thing to keep in mind that every insurance company checks the credit history of their customer to know the risk of default by the applicant. It is very common among insurance firms to charge people with higher insurance premiums with a low credit score.

So, it’s some of the common pitfalls one can face with poor credit rating therefore it is really important to maintain your credit score by repaying timely. If you are someone who is in dire need of financial aid or want to have credit card, look upon these factors to avoid any rejection when you "Apply For Loan Online" or offline. At the end, it is advisable to maintain a healthy credit score.


Labels:

Comments

Post a Comment

Popular posts from this blog

A COMPREHENSIVE GUIDE TO APPLYING FOR A USED CAR LOAN ONLINE

In today's fast-paced world, possessing a car isn't simply an extravagance but a need. For many, a used car is a magnificent choice to satisfy their transportation needs without breaking the bank. Notwithstanding, financing a used car purchase could appear to be daunting. Fortunately, to apply for a used car loan online has become a convenient and accessible choice. Here is a comprehensive guide to navigating the process without a hitch. Understanding Used Car Loans Before jumping into the application process, it's crucial to grasp the fundamentals of used car loans. These loans are specifically designed for purchasing pre-owned vehicles. Lenders offer varying terms and interest rates based on factors like credit history, upfront installment, and the vehicle's age and condition. Preparing for the Application 1. Know Your Budget: Decide your budget by assessing your financial situation. Consider factors like a month-to-month income, existing expenses, and potential init...
Post a Comment
Read more

A COMPREHENSIVE GUIDE TO AVAILING A LOAN ONLINE

In today's fast-paced world, the ability to get financial assistance rapidly and helpfully has turned into a need for many. While, you " AVAIL A LOAN ONLINE " offers a seamless answer for meeting various financial requirements, whether it's for education, starting a business, or dealing with startling expenses. Here is a comprehensive guide to navigating the process successfully. Understanding Loan Options Prior to plunging into the online loan application process, it's crucial to understand the sorts of loans available. Whether it's personal loans, business loans, or mortgages, each fills various needs and accompanies varying interest rates and repayment terms. Assess your requirements and financial situation to decide the most suitable loan type. Research and Comparison Whenever you've recognized the kind of loan you require, research various lenders. Various financial foundations, banks, and online lenders offer loans. Compare interest rates, repaymen...
Post a Comment
Read more

GUIDE TO BUYING A USED CAR: FIGURING OUT INTEREST RATES

As of now, in the fast-paced universe of today, possessing a car is neither a luxury nor a need. While considering the practicality of purchasing a used car, the vast majority of individuals arrive at this resolution. In any case, financing such a purchase can be troublesome. This blog aims to impart information regarding the intricacies of used car loans, with a particular emphasis on the critical component of interest rates. What is a Used Car Loan? A " Used Car Loan " is a financial product designed to assist individuals with the expense of purchasing cars. A used car loan, in contrast to a conventional car loan for another vehicle, is designed to accommodate the extraordinary circumstances associated with purchasing a used automobile. Factors Influencing Used Car Loan Interest Rates 1. Credit Score: An essential part of loan applications, the credit score significantly impacts the interest rate determination process. Individuals must maintain a decent credit history bec...
Post a Comment
Read more