A score less than 550 is considered a low CIBIL score, it can harshly damage your financial well-being. A low credit score is a result of your weak history, and it is a risky sign for lenders to offer any loan. You should always try to increase CIBIL score do not take it for granted because a low CIBIL score has several side effects.
Major side effects of a low CIBIL score
- Rejected loan applications- When you’re applying for a loan credit score is the important thing taken into consideration. No lender is interested to lend an individual who is facing the problem of low CIBIL.
- Charging a higher rate of interest- There are few lenders who still accept your loan application in spite of a low CIBIL score but at a higher interest rate usually in the case of the higher loan amount, they charge a higher interest rate to compensate the risk of default in payment.
- Loan approved on unfavourable terms- the terms and conditions which may be unfavorable for you. These can be in any form, like: – the approved loan amount may be too much lower than the applied amount; Higher EMIs in shorter tenure may be approved. A greater down payment may also be demanded loan approval. So, you need to increase CIBIL score to eliminate these effects.
- May affect your career opportunities- Sometimes to make hiring decisions employer considers credit reports. Due to bad credit score employee are unable to focus on their job. It provides new opportunities for various sectors like financial services, insurance, telecom, SEBI, or IRDAI. A low CIBIL score reflects your undisciplined personality. If your reasons are genuine for low CIBIL, you can explain them to the employer.
- You don’t get the best credit card rewards- The best rewards for credit cards require excellent credit scores. You will get attractive offers for good scores and invitations to any concert or event.
- Starting your business may be difficult- Nowadays most people want to be an entrepreneur and start their own businesses. To execute your idea you need a huge fund. With a bad credit score, no one is ready to provide you with huge funds; you can take the help of cibil credit repair company to increase CIBIL score.
- Increase in the number of tough inquiries- You will apply for a bad credit loan frequently to fulfill your existing need. It is difficult to get a loan easily so you need to apply with various lenders and each time you apply for credit the lender takes your credit report from the credit bureau is considered a tough inquiry. It declines your CIBIL score, If your loan easily gets approval it results in an increased CIBIL score.
Emotional Suffering- Generally, we are applying for credit when we need it most and on an urgent basis because no one wants to enhance their debt burden irrationally. Credit rejection causes emotional and financial distress for an individual. To increase CIBIL score in 6 to 12 months you need to show your responsible behaviour continuously.