How bad credit score affects you?
A bad credit rating is harmful to the borrower. It creates a negative perception about the borrower and changes the attitude of the lender towards the borrower, making it difficult to get any type of loan or credit card. Thats how bad credit score affects you as a borrower.
Let us understand what Detriments the credit score with the help of an example.
Rajeev has completed his MBA from a reputed business school and joined a reputed company as regional head sales with a decent salary. The bank in which he has opened his salary account offered him a credit card which he accepted. Rajeev started using his credit card and timely paid the dues. In between his sister’s marriage got fixed, to support the marriage expenses he has applied for a personal loan which got approved in a day looking at his financial discipline. His sister’s marriage ceremony was a remarkable event. Now he is back on his routine. While checking his emails, Rajeev found that he forgot to pay his last month’s credit cards dues. This month also he has used the credit card for paying his utilities and other expenses, the total utilization of the card has already hit and crossed the sanctioned limit. Rajeev’s see himself in a financial crunch as he has to pay the EMI of the personal loan and two months outstanding credit card dues. So decides to pay the personal loan EMI and minimum amount due for the credit card with the optimism of clearing the entire outstanding next month. However, things didn’t work as per his plan and again he sees himself in the same financial situation as last month with a higher financial obligation and this time he misses to pay his loan EMI. Does Rajeev’s story look familiar? This happens with many of us, due to different events in our life we find ourselves in financial crisis kind of circumstances. Nonpayment of loan EMI, using the credit card up to the maximum limit, credit card settlement, loan settlement etc. are some of the reasons behind low or bad credit score.
Disadvantages of bad or low credit score: –
There are many side effects of bad credit score, below are few discussed in detail.
- Loan and credit card rejection – Lenders are not enthusiastic to lend money to any applicant with a low credit score as it demonstrates a risky profile. Bad credit score will lead to loan and credit card rejection.
- High rate of interest – As an applicant with a low credit score is a risky borrower, a high rate of interest is charged by the lenders if at all they are willing to give loan.
- Difficulty in getting the loan – A bad credit rating is harmful to the borrower. It creates a negative perception about the borrower and changes the attitude of the lender towards the borrower, making it difficult to get any type of loan or credit card.
- Denial for employment – Yes, your bad credit score may affect your employment as many companies check the credit score of the job applicant before issuing the offer letter. High debt and huge outstanding on your credit card are the areas of concern for the employers and they may turn down your employment.
- Mental Stress – Nobody likes to receive reminders from the lenders or collection agency about the outstanding amount of payments, it increases the mental stress leading to strain in personal and professional relationships.
If your credit score is less than 650 we can help you to get the personal loan. Click here.
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