What’s stopping your bank or lender from approving your application? It’s challenging to navigate around financial institutions given the bad credit score considering the fact of bad objects being listed in your credit report. Do not take this issue lightly when your creditors are claiming your personal assets while lenders inquiring with local credit bureaus on your financial standing. The best option is to understand the pros and cons of a credit score.
Pros of a credit score
Aiming to secure a new loan approval, apply for a new mortgage, buy a new car, or simply borrowing to invest, your credit score does make a difference. Do not be tempted to signup for fast credit score recovery services. A quick fix can never prove anything to your lenders but only jeopardizing your overall credit rating.
1. A credit score does improve your reputation.
The first benefit of having a credit score does improve your financial reputation. If your existing score is not zero or underwater, you’re in good hands because of proper guidance in handling your personal credit report. Your reputation definitely is important when it comes to lending money out to you.
A good credit score seems attractive to the eyes of your lenders. It’s imperative to continuously look out for the right credit fixes so as to attract your interested financial institutions – else risking for unwanted loan service providers. Reputational assets seemed to play a major role in banks considering the fact of loaning to the right people.
Improving your financial credence not only helps to look attractive, but also giving you an opportunity to negotiate with the right people. Many good credit scorers are invited to have a meeting with local bankers in creating new credit lines as well as improving the overall credit rating in the long run.
2. Speed up loan approvals with a good credit score.
Another distinctiveness of having an excellent credit score of 800 or 750 fetches higher bank approval rates. There is no limit or boundaries for an excellent credit scorer. Lenders always looked out for those who have excelled in positive payment history, long tenure in debt repayments, and strong financial backing.
A lender may offer to speed up your individual loans upon reviewing your credit report score considering the fact of having a good financial position. It’s an indication of you being a responsible person and willingness to repay outstanding sums. No lenders in the right mind will loan out mortgages or debt obligations to someone who has low creditworthiness.
Once your banker reviewed your good credit score likely above 609 or 750, he or she proceeds to send the credit card application & personal bank loans to the backend office for processing. Expect an interesting response of quick loan approval due to high quality credit score rating from any credit bureau’s inquiries.
3. Request for better interest rates with a good credit score.
If you’re a usual visitor to the bank, a shopping mall, a grocery chain, or traveling abroad, withdrawing cash advances overseas & using checks to make payments are not uncommon sights. This is an opportunity to request for a lower interest financing rates if you’ve an excellent credit report score.
Be brave enough to step up by renegotiating for better bank interests in your personal loan application, a mortgage refinancing deal (most important), and your existing high interest car loan. Every asset is equally useful to enhance cost savings over a long period of time so don’t take this issue lightly.
Not securing better interests from your local personal bankers? It’s time to hop over to another rival bank such as HSBC, Citibank, or AMEX for new banking applications. A good credit score does help in getting higher approval rates in loans and financing deals. You should not remain loyal if any of the banks do not treat you in a high-quality fashion.
4. Excellent credit score does offset balance transfer interests.
One good advantage of possessing an excellent credit score is the attention showered by your lenders. It’s a beauty when your balance-transfer accounts have the ability to compensate for any current accounts or credit card interests. A lower rate of interest charged to your personal credit card & bank loan is a good sign of quality credit score.
Trusted by your bankers, you can use the balance transfer interests credited to offset any incoming debited charges. This leaves you technically not needing to pay any interest on outstanding loans. At the end of every month, your balance transfer account will automatically deduct the credit card interests and monthly bills – giving you a hassle-free environment in dealing with more complex issues.
No one lender shall offer good financial products to a bad borrower. You’ve to ensure a timely payment as well as proper credit control on your credit report. It’s because banks do offer 0% balance transfer schemes to individuals having excellent credit scores. A difference of 50 basis points can significantly impact your choice of lenders and vice versa.
5. Secure employment opportunities with a good credit score.
Looking to be gainfully employed, a new career, upgrading individual employability, or a job hop, a good credit score fulfills this option. What?! When two potential candidates applied for the same job function, the employer will use your credit score as benchmark to determine who secures the job.
There are many reasons to justify an employment opportunity. Below are some of the commonly associated terms why employers chose someone with an excellent credit score:
- Lowers risk of debt collectors & lawyers coming to the door
- Reduces uncertainty on credit frauds or identity thefts
- Perform optimally during an employment period
- Ability to withstand immerse pressure instead of financial distress
- Lock down for an extended period of time
- Working diligently & focusing on the role
- Not frequently taking leave to take care of credit problems
Similarly, any other organizations demanded at least an average credit score. Employees who faced challenges in debt repayments are subjected to certain clauses, thereby preventing employers from selecting them to perform dire roles, sometimes requiring employee income clearance & credit score calculations – an arduous task to consider in the long run.
Good to know about your credit score in year 2018
Regardless of the reasons above, a good credit score does help in good or bad circumstances (majority are positive). The rationale behind having a reputable credit report is due to the fact of letting your employers and lenders know they won’t need to face unforeseen conditions. It’s a debt relief at their end and closely observed the procedures for a safe credit score:
- Focus on repairing bad credit
- Pay up your bills in a timely fashion
- Never put up your credit info for sale
- Improve your credit score
- Ask a friend to help on credit checks
- Seek a credit inquiry & review
- Call your credit bureau near by
- Attempt to learn about a credit report during free time
These factors mentioned can assure a smooth endeavor in credit repair. The problem for most consumers is that they’ve the necessary tools such as a credit report, an update from creditors, and credit bureaus offering up to 3 times free reports to them. It’s just the inadequate knowledge that deters someone from reading a typical consumer credit report. Don’t be one of them but start educating on financial terms so as to file many disputes in getting a better credit score!
Cons of a credit score
Just as lucrative a credit score seems to be, it has a dual personality of having equally discouraging disadvantages. There is no end to the “demise” of someone’s badly tattered credit report. A mistake made or failed attempts in repairing a bad credit can easily put your financial position in great jeopardy. Check out the potential cons of a credit score.
1. No one promises a 100% fix in credit score.
Fixing your credit score is not guaranteed. One verified claim from a creditor or simply adding new current & credit accounts may increase your risk of improving your credit score. It’s not the easy way out of hiring a credit repair company to file many disputes to a credit bureau in hope of immediate rectification.
Sometimes, your creditors may rebut on your negative info claims by issuing official receipts of unpaid mortgages, outstanding loans, or missed payments. In doing so, the credit bureau officer shall take notice of several credit error disputes and oversee the entire process. Once the local government took control, it has full authority to determine the final verdict of who is to win credit report errors.
Knowingly on your end of being powerless in decision making, it’s practically impossible for you to risk an endeavor only to get rejected by local credit bureaus or even blacklisted by your lenders. This is risky at your end even if it is goodwill by trying to resolve certain bad disputes or managing your personal credit score account.
2. Having a credit score does not mean an outcome.
Most consumers got the misconception that having a credit score of 609 is better than a flat zero credit score (not to mention bankruptcy credit scores). While it is true to a certain degree, possessing a good credit score does not mean anything. The ultimate financial controller is the one who inks the deal on whether to finance your loan application or reject on a need-be basis.
If you’re ready to fix your credit report in a legal way, chances of improving your credit score will be higher. To your dismay, a credit score boost might not automatically secure a new mortgage loan, a personal loan, or an auto loan. Again, no one promises you anything when your score report depicts signs of hard work to improve overall financial status. The final say still depends on your bank’s decision.
A credit union does offer financial assistance to people. Assuming your credit score failed to obtain a new bank loan, you can use the reported credit score for reviews & seek credit unions for immediate aid. There might be a chance to get approved under certain strict regulations but no guarantee on any credit cards or loans again. No one has the ability to promise you a fixed success during a credit review.
3. Fluctuations on credit score during improvements.
One significant disadvantage of a credit report fix is volatility. In an event of hiring a credit repair company, fix a credit score report or file a potential discrepancy, you might encounter a jump or drop in your credit score. It’s a common sight to see some changes going on your fico scorecard but the change is not always a positive one.
Fluctuating credit scores don’t signify success! You’re in the midst of fixing a bad credit report while your creditors behind the scenes might be doing some “stuff” to file for legal credit dispute errors. Both parties are essentially countering each other claims & looking to offset certain laws in the short haul – likely benefiting the lawyers and financial institutions.
Indeed, there’re real cases of decline in credit score 609 to 550 even in the United States. It’s because the credit scoring agencies determine a negative credit rating on an individual’s profile for unpaid bad debts (written off). No major changes are to be made during the initial movement of a credit score.
4. Risk of getting rejected & downgraded.
Have you experienced a loss in credit score? Yes, many people underestimated the legal costs and implications behind improving their financial situations. Money is not the only variable in this credit repair equation. A local credit repair agency often chooses its customers on problematic credit fixes as there is low hope for clients who don’t pay for debt repayments – what more paying up for an agency contract in fixing bad credit.
One big risk is getting rejected by your lenders. An increase in credit score does not guarantee a bank loan approval or an upgrade in your credit report. In fact, being rejected is a common problem for most consumers as a fix in bad debts or report card is not the only criteria for banks & financial institutions to approve your credit card application.
Another risk is on downgrading of your credit score. High quality accounts don’t really face this issue, however. The only problem is an average credit score boosts to a good status may attract unwanted attention in rebuilding payment history only to assume more mortgage liabilities – last thing a lender wants in forcing into a “financial crisis”.
5. A boost in credit score is temporary.
The reason why some consumers leave their current blown credit score status is that they knew there isn’t any hope in boosting a credit score. A temporary increase in credit score does not justify financial institutions in finding your application attractive – banks do review hundreds of new lines of credit signups on a daily basis.
Since a temporary boost in credit score is not enticing, you might not express interests in investing time & efforts in rebuilding your credit report (let alone your credit score). But, come to think of getting a boost in exchange of a one-time limited effort is not exactly worth the risk in the long term.
Longing for some repeated efforts on a consecutive basis, your lenders might not want to do repeated transactions with you. A one-off effort is highly discouraged from any credit repair companies too considering the fact of bolstering a financial capacity for a short while more often than not faced great difficulties in future credit repair.
Good to know about a credit score in year 2018
After reviewing the above disadvantages about looking into your credit score, it does not mean the end of world in fixing your credit report. In fact, you should not discourage at all in doing necessary precautionary measures. A financial indicator is in position to help you in rebuilding the right way. Here are some useful tips in preventing a downgrade in credit score:
- Slowdown on your credit repair
- Focused one issue at a time
- Never apply for any guarantee
- Use an online credit score calculator (free)
- Learn the right way of calculating a credit score (paid)
- Hire a credit repair company
- Free up your existing credit utility ratio
- Perform regular debt clear up maintenance
Good things don’t appear for free. You’ve to undergo intense credit scoring tests & other forms of debt fixes before being eligible in affording a new financing deal from lenders or seek redress on unfortunate credit report errors. No one can promise you a credit score fix in the short run but sufficient efforts invested do increase the probabilities of success in attaining a bank loan – even without the need for a rise in credit score.
Quote of the Day: “A building does not establish by itself – KIG Hall [2013-2018]”
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This article was originally published on February 20, 2014. It has since been updated.