The credit score is contemplated as the key factor to depict a person’s creditworthiness. Most of the consumers are unaware of all the hidden reasons that might be negatively affecting their credit score. The customers generally presume that their cibil score is checked by the lenders to approve their credit cards or loans, which is false.
Here are a few drawbacks of low credit score that affect your life on a daily basis and have a negative impact on you.
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1) Impacts your Career & your Employment Opportunities
Many of the companies check for a credit report and your credit score while you’re applying for of a job, be it a fresher or an experienced applicant.
The Employers usually perform this to check the financial responsibility of their interviewees or employees. The Credit score is tested by all the financial institutions where a majorly large amount of money is handled or is under circulation. However, not just financial companies but also big business firms and SMEs, check the credit reports of their existing employees & new hires.
2) Credit Cards/Loans at Higher Interest Rate
Just in case if your credit score is low, it becomes quiet very tough for an applicant to get a loan at lower interest rates, credit cards with additional perks or benefits are also denied to the customers that have a low credit score. All your defaults or late loan repayment gets recorded in the credit report of the respective applicant, which usually gets tracked down by the lending companies before any credit card/loan approval. After the lending company checks these reports with low credit ratings, it becomes very apprehensive for the company in granting any loan or credit card to such applicants.
3) While renting a house
Renting companies, property management, and Landlords do perform a strict and thorough check on the credit scores of their tenants to make themselves aware of their customers’ rent payment capability and also their financial stability. A Good CIBIL score can help you rent the home of your preference without any compromise.
4) Lending products become easier
A Low credit score can make you pay extra money for any lending product that you wish to buy or purchase or rent, such as life insurance cover, home loan, car loan, credit card and various types of insurance, etc. Even different cell phone providers and utility companies ensure to check your credit score. If they find it on the lower side, then they usually tend to charge you higher interest rates and higher fees from their customers.
5) Credit Score takes nearly years to improve
The improvement in your credit score does not happen overnight, or in months, it takes a lot of time to do so. Sometimes it even takes years if the credit score is really bad and on the lower side. Hence, it directly has an impact on the customer’s daily life. The fact that it’s a long-term process, customers should not delay in credit card repayments or default in paying any loan EMI.