A lot of times people do not realize what bad credit can do to their lives. But what is a bad credit? How am I supposed to know if my credit is good or bad? How will it impact me?
We are here to throw some light on the same and help you make your simple.
A bad credit is a statement which describes your past failures to make the credit payments on time. It means you were not regular in making all your EMI payments on time or even if you’ve paid them at all.
Your credit reports are sent by lenders to the credit bureau companies like Equifax, CIBIL, etc. who then compile all your transactions and create a credit report. Based on the credit report the future lenders determine if they would like to lend you a loan or a financial product like a credit card or so. Most Indian banks prefer CIBIL over other bureaus for credit checks, if your cibil rating is bad it is unlikely you will get a loan from any bank. Not only it will affect your financial status but also can make your life complicated.
The following list will help you consider if any of the following is affecting your life right now,
Imagine you encounter a life emergency and are in urgent need of funds, you did try to speak to your friends and family and no help arrived. At this time you think you can opt for a loan, but when applied you were denied a loan based on your past bad credit personal loans. This situation can arrive to any one at any given point; this is why you are suggested to make regular EMI payments of your loans to maintain a good cibil score, which will help you get a loan without any hassles.
When you have a bad credit, there are some banks and non-banking financial companies which will process the loan for you but there are high chances that you will end up paying high interest rates as compared to market standards. In emergency situations, you do not think this through and end up paying high interest on the loan due to bad cibil score.
Especially when you are purchasing a property or a car, you are compelled to pay a higher down payment so that the creditors have less risk on your profile. You may have to postpone your dream house or the car because of a bad credit.
These days there are employers who not only do a background check of your previous employments, but also do a credit check to understand your spending patterns and financial stability. This check is specially done for higher positions where you will be trusted with big projects of the company and how would you manage the same.
When you are focused paying old debts with interest, you lose track on savings. Savings is an integral part of life which can help you in desperate needs and if you are only focused on paying your old debts, it can create a lot of problems in life.
If you do not have proper savings to secure your future with your spouse, your relationship will be in danger. There will be fights every time a creditor calls or knocks your door for loan money. This is why many couples at their early stages discuss this through to help each other build a good credit.
A bad credit can lead to high stress. It's generally because the creditors will call you again and again for their money. This will not only hamper your financial life but also your personal life.
It is not that you're stuck in this situation forever, but you will need a lot of focus and determination to move out of a bad credit. Always check your credit scores regularly to track your progress. It's really difficult to break free this shackle but once you are out you will live in a financial harmony.