For many of us, credit score may seem like a nonconsequential thing. There are some of us who have not even heard of credit scores and there are some who know something about credit scores but do not think it is important enough. For all those and many others who think that credit score is not important, we beg to differ.
Don't we live in a consumption-led society? Every single day there are people buying new homes, new vehicles, avail loans for everything from holidays to medical emergencies and education. And not to mention how easily everything from online shopping to ordering food to groceries to shopping at a mall is a breeze with a credit card.
Now can you imagine your life without all these financial instruments? No loans, no credit cards, seems quite difficult? How about you apply for these when in need and your applications get rejected?
Additional Reading: No credit score? Fret not! You can still get credit
Did you know a poor credit score features among the top reasons for which loans or credit cards are rejected?
Ways in which a poor credit score affects your quality of life
Loan or Credit Card rejections: Barring a few who take every opportunity to apply for a loan/credit card, generally credit is sought when it is needed. And imagine being in a situation where it gets rejected. To add to the injury, each rejection takes your credit score further down. Being stuck with a poor credit score affects the availability of credit when you need the most.
This thought sounds worse when you are faced with conditions like a medical emergency or an unplanned vacation, which you thought you could tide over with a personal loan. When the need is immediate, all you can do is borrow from the unorganized sector on exorbitant rates of interest or avail secured loans like gold loans.
Also think of a situation, when you chance upon your dream home at a great price but have to let it go only because of your loan application gets rejected.
These sound like simple instances, but they go a long way in affecting the quality of your life.
We wish none of you land in such situations due to a low credit score. Hence we offer you a complete analysis of your credit profile by means of a credit health report which comes in with recommendations on improving your credit score.
If improving your credit score is your first priority then check out ways in which you can improve your credit score at CreditMantri
Loans or Credit Card on Unfavorable Terms: In addition to loan rejection, loans or credit card may be sanctioned on unfavorable terms. This could show up in many forms like shorter than expected tenures on your loan, higher interest, a bigger down payment amount etc.
All these options definitely throw your budgets out of the track.
As you know a home loan is a long tenure loan and loans on a higher rate of interest will end up ballooning your EMIs. A small percentage increase in interest over the entire period of the loan will increase your total outgo on the loan significantly. Similarly, you may find it difficult to fund a bigger down payment amount.
On the credit card front, you may be issued with a prepaid credit card or a card against a fixed deposit. Both these options defeat the purpose of owning a credit card.
So, you realize that having a low credit score negatively affects your quality of life in more than one ways. Like how you care for your physical health by going for medical checkups and exercising, credit health also needs equal care and discipline. Start by checking your credit score today.