Credit score of an individual plays a very vital role while availing the loan or credit card. All the responsible lenders and banks carry the credit checking process that helps them to understand your credit background. It is the main factor that dictates your eligibility and assists you to get successfully approval or became the factor of rejection. That is the reason; borrower must take their credit report from credit bureaus and check them carefully before applying for any sort of loan help.
- Definition
Good credit scores reflect the good credit history of an individual. It comes as a result of borrowing money in the past and repaying it every installment on time. Repaying loan amount in full on due date provide the good credit rating to the borrower. Debts that contribute in getting good score are student loans, mortgages, business loans, unsecured loans and so on.
Bad credit score are results of making defaults on your previous payments. This is typically incurred because of taking high interest deal and unable to pay it back in full. It appears from poor payment practice where borrowers are unable to make even single payment for numerous months.
Bad credit score are results of making defaults on your previous payments. This is typically incurred because of taking high interest deal and unable to pay it back in full. It appears from poor payment practice where borrowers are unable to make even single payment for numerous months.
- Understand The Difference Between Good And Bad Credit Score
It is very important to know that good credit scores can provide you number of benefits whereas bad credit rating can put number of negative effects.
- Advantages Of Having Good Credit Scores
One of the main advantages of having good credit is that it helps in acquiring the cash help with reduced interest rates. Applicants having excellent and good ratings are entitled to have any loan and credit card at cheaper interest rate. This prove to be of great help for the people who use their credit card frequently or who need some cash help to fulfill some of their requirement like buying new car.
Another advantage of good credit rating is that it helps borrowers to get greater credit limits. It means your credit card allows you to spend more and lender give freedom to take the bigger loan as per your need.
Another advantage of good credit rating is that it helps borrowers to get greater credit limits. It means your credit card allows you to spend more and lender give freedom to take the bigger loan as per your need.
- Negative Effects Of Bad Credit Ratings
Bad credit rating brings number of disadvantages for the holder which is pretty much opposite to the benefits of having good credit rating i.e. they needs to pay high interest rate and got the lower credit limit. Another disadvantage is that loan seekers often face difficulty while getting the loan approval or credit card. Bad credit holders can also face problem while acquiring apartment on rent or applying for insurance policy.
- Effects On Your Unemployed Loan Application
As discussed above credit score of the applicants can hugely effect on your loan applicant. In case, of unemployed loans it may plays a decision taking factor as applicant has no more get the trust of the lender. Borrowers with good rating can easily acquire these loans and that at reasonable rate. But poor credit holder have to face little problem while getting the approval. Bad credit holders can also get the approval of unemployed loans but only if they can prove their repaying ability. However, it is to known that they have to pay higher interest rate as compare to good credit holders.
