Impact of Low Credit Score
1. Loan and/or Credit Card Approval
If you have a low credit score, lenders may turn down your application since a low/poor credit score is a mark of low creditworthiness. Any default or delay in the loan repayments gets recorded in the credit report of the applicant, which gets tracked by lending companies before any loan/credit card approval. On checking a credit report with a low credit score, lenders can get apprehensive in granting a loan or credit card to such applicants.
2. Higher Loan Rates – Lower Benefits
A low credit score will most likely impact your credit application in a way that it will either get rejected or be approved at higher interest rates. Maybe a low credit score won’t affect you immediately, but it might create a problem for you in the future. Therefore, keep checking your credit score on a monthly basis or once a quarter.
3. Lower Credit Score- No Pre Approved Offers
Even if you have an existing relationship with the bank, you may not get any pre-approved loan offers because of your low credit score. For example, you are a salaried individual with a good salary, yet you will not get any pre-approved loan or credit card offers due to the same reason of low credit score.