1. You Get Better Loan Options and Credit Card Deals
Before approving or declining your application, banks, and moneylenders will examine your credit. If you're approved, the interest rate on your loan or credit card will be partially determined by your credit score. The higher your credit score, the more likely you are to be approved and acquire a low-interest rate. Other factors, including your income, credit history, and outstanding debt, might also affect your interest rate.
2. Renting an Apartment Becomes Easier
Before renting out an apartment or a house to you, many landlords and property management organisations will check your credit score to ensure timely payments. Poor credit can make it very hard to get approved or result in a higher security deposit, whilst good credit can help your application stand out.
3. Purchasing a House or Car Becomes Manageable
A good credit score is required to receive a decent deal on a car or home loan from a bank or financial institution. A high credit score might result in a lower interest rate, a larger loan credit camount, a longer repayment time, and a higher chance of loan approval. Your loan application may be denied if you have a poor credit score. There's a chance that lenders will charge you a greater interest rate than usual and/or provide you with a lower loan amount than you need with a poor credit score.
4. Limit on Credit Card Increases
If a lender comes to know that your credit score is falling consistently, he may lower the limit on your credit card. This step is to help you stay on track with your spending so that you don't end up spending a lot, resulting in a huge credit to pay back. If you still spend without considering the lower credit limit, your credit utilisation ratio will increase, negatively impacting your credit score even more.
5. Refinancing of Loans is Possible
To refinance a loan, you must first qualify for a new loan and then use the funds to pay off your existing debt. It’s a common way to save money or lower your monthly payments, or maybe both with student loans, car loans, and mortgages. A personal loan can also be used to consolidate and refinance high-interest credit card debt.
Because you apply for a new loan at the time of refinancing, your creditworthiness can influence the rates of interest and the amount of loan you're offered. The better you maintain your credit score, the more likely you are to qualify for a low-interest loan and reap the benefits of refinancing.
6. Positive Impact on New Business
Even if you have a fantastic and viable business idea, you may require a business loan to convert it into reality. It may be difficult for you to live a prosperous future because of your previous financial behaviour. If you have a low credit score because you have not paid your payments on time, your lender may find it difficult to trust you and lend the money, making it harder for you to raise funds for your company.
7. Approving Effect on Relationships
You might be wondering how credit affects your life relationships? Actually, your credit score may make or break relationships. You might lose the trust of your business partners which may lead to your removal from the company. If you continue to manage your finances in a bad way, you may end up getting ignored by your friends due to the fear that you might ask for financial support in the upcoming days.
8. Getting A Job and Maintaining It
Employers may want to know that you are financially responsible and that you do not have any debts that could impair your judgement. In case you have a job, your credit may affect your ability to earn a promotion or stay in your current employment, especially if it needs a security clearance.
If you don't grant written consent, a company can't pull your credit as part of an employment check, and several jurisdictions outright prohibit the practice.
9. Offers From Moneylenders or Bank
Your credit score makes it evident how particular you are with regards to timely payments. In case your credit score is low, it reflects that you've been delaying or failing on payments. On such occasions, lenders will try to contact you and remind you of your debts. If you do not react to their calls, they may end up sending legal notices. All of these reminders will make your life a mess.
