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 The impact of financial obligations on your credit score

The impact of financial obligations on your credit score

There comes a time in everybody’s lives when they need to avail a loan. Irrespective of whether you want to avail a secured or unsecured loan, your past record should display a positive repaying ability. Your lenders need to be assured of the fact that they will get their money back as per agreed terms.

Why is it important to pay bills on time?

 Whether it happens to be your credit card bills or monthly dues such as rent, gas, electricity etc it is always a good idea to keep up with all your dues so that you can stay worry free. Although there are several provisions to pay your dues at a later date, procrastinating never helps, especially wherever money is involved.

The upside to paying your bills on time is that:

  • No delay, no dues.

The moment you default in repaying your loans or forget about your bills, you end up spending more than the original bill’s worth. Why? Because you have to bear the value of the bills plus some kind of late payment charges. Now, do you honestly believe that it’s necessary? Don’t you think with a bit of planning you can beat the odds of defaulting? You sure can. But, planning alone isn’t enough. Implementing your plans is where it all figures.

  • Maintain a healthy credit record

By being prompt in all your payments, you automatically ensure a positive credit record and eventually an improved credit score. Wondering why a healthy credit record is even necessary? Well, the next time you want to avail a loan, be it any type of loan your credit score will have a major role to play. One of the deciding factors for your loan to be approved or declined is your credit score. With the recent spate of defaulters, banks and other lending institutions have become ever so cautious about whom they lend their money to. This is precisely why your credit score should be well and above the cut-off score expected by your lender.

  • Spend wise and Save

Remember that, you don’t have to spend less to save; the trick lies in spending only when you have to. Being thrifty and influencing others in your family to be the same will not only help in saving up, but also help you in facing unforeseen expenditures without hindrance.

Always, keep your debt burden under control because you don’t want your loan to be rejected at a time when you really need one, right?


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