There are many myths and rumors about credit scores. But some myths about credit scores are also true. A credit score has the potential to severely affect your financial life and your career. Your credit score is an indicator of your financial habits. Banks and financial institutions check your credit history. Through this they try to understand how much better you manage your money. Therefore, through this article, information is given about five ways on which credit score can affect your life.
Importance of credit score when buying a house
You should check the recent changes in your credit score before you book your own house to fulfill your and your dreams. Because lenders generally prefer to give loans to people who have credit scores in the range of 750–900 points. Banks follow a strict verification process while sanctioning home loans. Verification of credit score plays an important role to qualify for taking home loan on good terms and interest rates. Your credit score indicates how responsible you are for managing debt and how efficiently you repay the EMI of your loan. Lenders can estimate whether you are able to pay your home loan on time through a credit score. Those with a low credit score may have to pay a higher rate of interest on their home loan. Therefore, credit score plays a very important role in acceptance of home loan or any other type of loan.
How a Credit Score Helps in Getting a New Credit Card?
Have you ever wondered why your credit card application is rejected by your bank? You should check your credit score before applying for a credit card. Credit cards with good benefits and rewards are often accepted for individuals with a high credit score. If you have a good credit score, you can get attractive bonus and rewards like free movie passes, fuel discounts, bonuses, shopping or cash back on using credit cards at the airport lounge. If someone’s credit score is average, they should work towards improving the credit score and apply for a credit card after the credit score has improved. It takes time to improve credit score. So in the meantime make sure to pay your credit card bills and EMI on time. Also, do not apply for multiple credit cards at once, as this may indicate that you are in great need of credit or you are expensive.
A good credit score can help in taking a car loan
Have you applied for a car loan? If not, check your credit score and know your qualifications. Like any other loan, to qualify for a car loan, your credit score must be in a certain range. A good credit score can help you get a loan from the financial institution of your choice. But if your credit score is low, the chances of getting a loan with better terms and benefits are reduced. Banks evaluate you on the basis of credit score before taking a loan and if banks find you with a low credit score, then your car loan application may be rejected.
Businessmen with good credit scores get funds easily
Expansion and development of any business requires money. Such credit is the lifeline of new and already established businesses. If you are starting a new venture or you need credit to invest in a new project, you can arrange money with the help of business loan. If your credit score is good, banks and financial institutions may be willing to loan you at a lower interest rate and on your own terms. Banks usually give loans to businessmen who have a steady income and who have a good cash flow inward. If your credit score does not meet the eligibility of banks, your business loan application may also be rejected.
Credit score affects your ability to get a job
Are you applying for a new job? If yes, keep in mind, usually employers check the credit rating of the applicant before giving the job. A person with a good credit score can positively affect their chances of getting a job. If you want to get selected for a new job, then you should try to update and improve your credit score as well as your resume before applying. A good credit score instills confidence in the employer that you are responsible and can manage your finances efficiently.