A missed credit card bill payment or non-payment of EMIs on time will have a negative impact on your credit history. They indicate that you have trouble in fulfilling your financial commitment. Timely payments of interests and EMIs in the past reflect positively on your credit score and thus makes loan application easier to sail through.
Credit Limit Utilization
Most credit cards today offer high credit limits to customers. However, a maxed out credit card limit could reflect poorly on your credit score. A higher utilization of available credit limits shows a higher repayment liability. Lower the credit limit utilization, higher the credit score.
Multiple Loan Burdens
Often, multiple loans taken during a specific period of time might not be considered positive by certain banks & financial institutions. Multiple loans might suggest high debt burden and can have a negative impact on the customer’s credit score.
Pending Loan Settlement
When customers have a record of inability to settle loans taken by them, banks tend to reject their loan application. It also reflects poorly on one’s credit score. The individual would even find it difficult to apply for a loan after this as their application would be declined outright.
This may surprise you. But, if one has never used a credit card or borrowed a loan previously, their credit score would be zero. It also makes it difficult for lenders to determine whether an individual falls in the high risk or low-risk category as they have no history of loan repayment or pending credit card bills. However, when the customer is new to credit, banks look at other factors like employment and income to decide the repayment capacity.
Thus, a good credit score paves way for a hassle-free loan approval and even cheaper loans. Looking to get a loan? Apply with Loanz, an expert online consultant which makes loan application process easy with an array of financial services.