As loans generate a monetary obligation to repay them from future earnings, folks ought to prevent taking loans, unless it is really urgent or one desires to generate assets or boost one’s earning prospects. However, to get a loan on favourable terms at the time of requirement, one ought to generally preserve a healthier credit profile.
“In today’s unstable socio-economic climate, an individual may require a loan at any time. The sky-high inflation, volatile ups and downs in the market, and add to that; the post-pandemic turbulence. These factors can surely necessitate a need for credit in any person or organisation that wishes to meet these importunate expenses in the new normal. For availing credit from any fintech enterprise or NBFC, you need to mark a few ticks. First and foremost, a solid credit history is a must for obtaining any form of credit in the present as well as the future,” mentioned Rohit Garg, Co-Founder and CEO, CleverCoin.
To make a credit profile healthier, a individual ought to have a clean credit history backed by a excellent credit score.
Garg explains how a excellent credit history can positively influence your loan application:
- A excellent credit history can aid volumes in enhancing your all round credit report. If your credit score is higher, you will get low interest prices and fewer charges.
- A sound credit background also enables quicker processing of loan requests and credit applications. This can prove invaluable in case of a health-related emergency or any such unforeseen occasion.
- Your potential lenders will regard you as a accountable and trusted borrower if you assure the timely repayment of dues.
- A excellent credit history signifies you can have your favourite choose from a plethora of credit selections. When it comes to acquiring credit loans, the luxury of selection is restricted only to these with a favorable credit score.
- A excellent credit history is additional more desirable. A individual with a strong credit background will certainly be exempted from recurring reminder calls and individual visits from loan collection agents or legal repercussions.
Contrarily, an individual’s terrible credit score will naturally hold dire consequences for them.
When to borrow and how credit scores aid in borrowing
Garg lists the implications of getting an unhealthy credit score:
- You danger becoming blacklisted by lending businesses and other monetary institutions if you prove to be a reckless purchaser or borrower.
- Unlike these with a sound credit score, your selection of credit selections will trickle down to a bare minimum.
- Any loan applications or credit requests that you submit will be rejected on the grounds of a poor credit history riddled with outstanding EMI payments, debts, pending credit card dues, and so forth.
- A quantity of employers across businesses comply with a policy of verifying an applicant’s credit history as component of the formal approach. A terrible credit history can substantially lower your probabilities of coming on-board.
- That’s not all. If you want to commence your personal business enterprise, a poor credit score is terrible news. No lending firm or monetary enterprise will ever take into consideration sanctioning any credit to you.
“Therefore, having a positive and healthy credit score is of the utmost importance. As you can see, it can literally make or break a person. Make sure that you always keep a good credit profile and uphold the best financial practices to stay ahead, both in business as well as personal life,” mentioned Garg.