People take loans all the time- home loans, personal loans, auto loans- the options are plenty. However, the process of applying for a loan and actually receiving the funds is a long and tedious one. There are many people who don’t get loans at all, even after numerous attempts. So, what can you do to get a loan as quickly as possible? If there is one thing that you can do, then it has to be credit score improvement!
How Does Good Credit Score Benefit Loan Applications?
When a bank receives a loan application, then it checks a variety of things before approving the same. These include the applicant’s repayment history, existing debt, credit utilization ratio, length of credit history, etc. However, the most important thing that it considers is the credit score.
Your credit score lets the bank know how high your creditworthiness is. So, if your score is low, then it would suggest that you face problems with credit and personal finance management. However, if your score is high, then it would know that it can count on you for the loan’s repayment and that the risk of defaulting is minimum. Hence, it would approve your loan application rather quickly.
Apart from instant loan approvals, high credit score also helps in the following ways:
1. Better Rates
If you seek more affordable loans, then you have a very good reason to increase credit score. This is because those who have a good score are able to get lower interest rates from the banks. When your score is high, then you know you have the leverage at the time you want to negotiate with the bank. You can urge the lender to offer better interest rates in light of your good track record as evident by the good rating. More often than not, they agree without giving you a hard time.
2. Bigger Loans
As the loan amount increases, so does the risk for the lender. So, if you want a big loan, then you can increase the odds of getting approval by checking your free credit score first. If you see that your score isn’t up to the mark, then you can work on it before you submit the applications. Otherwise, when you need a loan on an urgent basis, then you might be able to get only a small portion of the same from the bank.
3. More Options for Jobs
You may find it surprising but many companies, especially in the finance domain, now review the credit reports of the candidates who appear for jobs. Usually, they check if they i.e. the candidates have ever defaulted on a loan in the past or if their score is up to the mark. The idea behind this measure is that if someone has a bad credit history, then they are also unlikely to be suited for a professional job. This again has to do with the usual association of bad credit rating with personality traits like lack of discipline, time management problems, etc.
You may not necessarily be judged on the basis of your credit rating when you appear for job interviews. However, if you don’t want to take any chances, then it’s strongly recommended that you increase credit score as much as possible before proceeding.
4. Higher Credit Card Limits
Most credit cards come with fixed limits and you can only spend within these limits and not a penny more. Naturally, you would want the highest limits possible so that when you are in a cash crunch or in case there is a financial emergency, then you can use your credit cards for help. Now, here is the thing- the lenders are usually more willing to increase the limits when the users have a good credit rating. So, if it’s high credit limits you seek, then you should check your free credit score today itself and see if it needs some improvement.
As you can see, there are numerous benefits of a good credit score. So, if you ignored yours so far, it’s time to take control and make improvements. Always remember- a good rating will help in your entire life!