Buying something in credit means that a person can purchase an item with the assurance that they will return the amount within a time period. Today, the use of credit cards and taking out loans has become a common affair, with the presence of a good credit score being important.
A credit score is basically a report which contains all the details regarding a persons’s previous loan transactions. If he or she paid the bank in regular instalments without any hindrance or delay, his or her credit score rises up. A bad credit score does not necessarily mean that he or she will not get loans in the future, but will definitely face a lot of obstacles while doing so.
Benefits Of A Good Credit Score
With a good credit score, a person becomes eligible for a number of facilities and benefits from the banks and money lenders. Some of these advantages of having a good credit score are given below –
Loans And Credit Card Application Get Approved Easily
With a good credit score, a person becomes more eligible for future loans being approved. Also, he or she may apply for more number of credit cards too. As the banks will see their credit history, upon seeing regular payments, they will automatically allow a loan to be taken out by them.
Avoid The Hassle Of Security Deposit
Whenever something expensive is bought in instalments, the seller might ask for a down payment or a security deposit in the initial stages. If the seller sees a poor credit score, he or she will definitely ask the buyer for a hefty security deposit to reduce the risk of erratic payments. But with a good credit score, a seller might waive the security deposit, as he or she can see no risks with their financial history.
We all know the huge amounts of money which is needed for education these days. With higher education, colleges and universities are not getting any cheaper. This is the reason why millions of students take out educational loans every year. The repayments of these student loans are carefully monitored, and with proper payments made, the credit score rises up. With this, a person can take out future student loans too, where the interest rates also get lowered due to the regular payments made during the previous loan.
In the world of start-ups, it is a known fact that without funding, no company will ever become huge. Moreover, new business need enough capital to have a strong foundation and being their journey on a positive note. For this, these businessmen need to take out business loans provided by banks. The banks thoroughly check the the person’s income along with their credit history. With a spotless record, the loan gets approved quite quickly.
Car Loans And Insurance
Car loans are taken out whenever one purchases an automobile. As it is not as big an amount as taken out during a home loan, getting these loans approved quite easily compared to home loans. But the difference between a good credit score and a bad one is that with a poor credit score, the interest rates which are levied on these loans get increased. With a proper credit history, these interest rates are quite low, with the premiums being paid on the insurance also getting reduced significantly.
Coming to home loans, these loans are significantly larger, which is why the necessity of having a good credit score becomes so important. Although these loans get approved after several factors such as income and debt are checked, a good credit score definitely helps the process become easier for the buyer.
Interest Rates Get Lowered
Whenever someone applies for a loan, a small amount of loan is added along with every instalment. This interest can vary from person for person with the main factor being their credit history. People with good credit scores are charged with far less interest rates as compared to the ones with a poor credit history.
Banks usually will not provide people with low credit scores a huge amount of money. With a good credit score, the limit for maximum amount which could be loaned becomes higher and more flexible.
Today, many companies, mostly in the financial world, and government jobs require a person to have a good credit score before they can be employed by them. A person might be rejected even though he or she has all the necessary qualification, all because of a poor credit score.
Thus, we can clearly see the vast number of advantages one can enjoy with a good credit score. In a world where money is an important resource, it is necessary for a person to save more and spend less, which can be possible with a good credit score.