Credit Score: After taking a loan, there is a pressure on the person to repay it with his future earnings, so it is said that unless it is very necessary, one should avoid taking the loan. However, sometimes there are some such compulsions, where we have to take loans even if we do not want to. Often you must have seen that some people get loans very easily, while some people have to put a lot of papad in it. In fact, whether a bank or financial institution will give you a loan or not, it depends on how your credit score is. That’s why it is said that one should always keep their credit score better in order to take a loan on favorable terms.
According to Rohit Garg, Co-Founder and CEO of SmartCoin, “There are many ups and downs in a person’s life. So you may need a loan at any point of time. To take a loan from any fintech venture or NBFC, it is very important for you to keep a few things in mind. The most important thing is that you have a good credit history. Any bank checks your credit history before giving loan. To improve your credit profile, a person must have a good credit score as well as a clean credit history.
Here we will explain how a good credit history helps you get a loan.
- A good credit history helps in improving your overall credit report. If you have a good credit score, you can get a loan at a low interest rate.
- Banks or financial institutions approve your application quickly when the credit score is good and the loan related processes also do not take much time. If there is a medical emergency and you need a loan as soon as possible, a good credit score can help you a lot.
- The bank considers you a responsible and reliable borrower if you repay the outstanding amount on time.
- A good credit history means that you can choose your preferred one from a plethora of credit options. If your credit score is good, then you will have a lot of options while taking a loan. You can choose the best option out of these.
On the contrary, if your credit score is not good then you may have to face many problems. Here we will tell what are the disadvantages of a bad credit score.
- If you are negligent in making purchases or repayment of loans, you may be blacklisted by the lending companies and other financial institutions.
- You will not have much choice while taking a loan, as most of the banks or financial institutions do not want to lend to a person with a bad credit score.
- The application submitted by you for the loan will be rejected on the ground of bad credit history.
- Many companies verify the credit history of the applicant as part of a formal process before hiring any person. If your credit history is not good then your chances of getting selected for the job are also less.
- Not only this, if you want to start your own business, then a bad credit score can create problems for you. In such a situation, no bank will accept your loan application.
For these reasons, says Garg, it is very important to have a good credit score. A good credit score can decide your future. It can help you achieve the goals you have set in your life. You should keep checking your credit score at a regular interval. With this, any discrepancy will be detected immediately and thus you can save your credit score from getting spoiled. Apart from this, people who have a good credit score should also keep taking necessary measures to maintain it.
(Article: Amitava Chakrabarty)
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