The benefits of a good credit score for loan approval
We recently discussed five factors affecting your credit score and the difference between a credit score and a credit report. But how does your credit score affect your chances of loan approval? And what other factors in the loan process will it affect? Nowadays, a good credit score is required to obtain nearly any financial product from a bank. Not only this but did you know that your employment, cell phone bill, insurance and your ability to get cable could balance on your credit score? It’s clear this magic three-digit-number is vital for your credit health and knowing the value it weighs on your financial future is detrimental.
In Canada, credit score ranges from 300 to 900, with the average credit score being around 650, according to TransUnion. In order to get approved for personal loans, car loans, mortgages and more with the bank at competitive rates, your score must be 650 and higher. Yes, it’s true, you can survive on a bad credit score, but living this way will make your financial life extremely difficult. Your credit score is a deciding factor on whether you’ll get any loan and how much it will cost you to pay it back.
Do Canadians understand the cost of a loan?
In a recent study conducted by Finder.com, surveying 1,200 Canadian adults to find that 65.33% of Canadians have taken out a personal loan. Following this, Loans Canada found that 56% of credit-constrained Canadians are unsure of all the factors that affect the cost of a loan. From what we gather, Canadians aren’t sure why they’ve been approved (or denied) for a loan, how the bank decided their interest rate and why they haven’t been approved for their desired amount.
Lower interest rates
In short, the interest rate on a loan is how much the loan is costing you. It’s usually a percentage of how much money you borrowed and is directly correlated to your credit score. If you have a great credit score (650 or over) you’re in luck. This allows you to bargain on interest rates and pay lower finance charges. However, a bad credit score results in quite the opposite. Your interest rates will be very high and that’s if you’re even accepted for a loan. Keeping a good credit score will mean interest rates will be the least of your worries.
A better chance of personal loan approval
A bad credit score shows a financial institution that you’re not reliable for making payments, which is an unattractive trait to any trustee. So, given this, if you’re credit score is good, you have a better chance of being approved for a loan. Having an excellent credit score doesn’t guarantee approval, because lenders still consider other factors such as your income and debt. With a good credit score, you can apply for a loan with a lot more confidence and ease. This will help to eliminate any financial-related stress.
Get approval for a higher loan amount
If your credit score is poor, banks will not approve you for higher limits. Your borrowing capacity is decided on both your income and your credit score, and if one is low, it can affect how much money you can borrow. Taking care of your credit score is crucial in ensuring you don’t stumble into an obstacle like this.
Buy the house of your dreams
Your credit score is an indicator of how financially responsible you are. So, if your score is poor, a bank will not see you fit to obtain a mortgage. Don’t worry if you’re score isn’t 900, no one is perfect. But your score needs to be 650 and over for the banks to see you as a good contender for a mortgage. As part of your five-year-plan, ensuring your credit score is average or above is important to make sure your future home buying plans stay on course.
Improve your credit with a loan
Have you ever wondered if taking a loan out would benefit your credit score? Well, we can make that happen for you. Score-Up’s revolutionary Booster Subscription gives you the option to pay for your subscription using a loan. Each affordable monthly payment of $49.99 is reported to the credit bureaus. This will further boost your score while working alongside Score-Ups credit bolstering technology.
So what is Score-Up?
Well alongside reporting positive payments, Score-Up will help you create a credit score target based on your financial plans and credit history. Our software then analyzes your credit report to develop a fast and clear path to build your credit score. Follow our real-time recommendations to make a positive impact on your credit score, giving you confidence for future financial events
Once you reflect on all the benefits of having a good credit score, it’s something to be proud of. But figuring out how to improve your credit score can be a difficult task. Let us help you build a positive financial future and improve your credit with Score-Up. To learn more about your credit score, check out our blog here.
About Marble Financial Inc. (CSE: MRBL; OTCQB: MRBLF) We are a group of forward-thinking financial technology experts that fully understand the benefits and drawbacks of credit in Canada. Marble helps Canadians increase their credit to gain access to prime lending. Through our industry-leading proprietary technology solutions Fast- Track, Score-Up, and Credit-Meds. Our proven strategy guides our customers back to a meaningful credit score, 50% quicker than traditional methods. Since 2016, Marble is proud to have empowered thousands of Canadians to a positive financial future. We continue to establish ourselves as leaders in financial wellness.