Financial Strength: Not Always Equal To Good Credit Health

Many people think that if you are financially strong, you can get whatever you want. You can conquer the world if you are financially strong, but what do you mean by financial strength?

Financial strength really means that you have good amount of funds to sustain yourself and your family for a period of time. At this period of time, requirement of loans for such people are not necessary. 

But in case if they require loan of expansion of their business or any other purpose, their income is not the only factor which is considered. The factors which are considered other than income, which are their credit score as well as their credit health. 
            

Credit score and credit health will be a new term for many individuals. 

Basically credit score is a three digit numerical figure which is a snapshot of the credit health of the individual. Credit score ranges from 300 to 900 for all the bureaus. Credit score is generally considered as the prime factor in approval of loan, credit card. Nowadays telecom companies and insurance companies also check the credit score of the individuals before their enrolment with them. 

Credit score are calculated by the credit bureaus of the country. Considering India, there are three bureaus which are Cibil, Experian and Equifax. High Mark is also been rising bureau in India. These bureaus collect all the information of every individual from all the banks and financial institutions in the country.  

On the basis of their present and past credit behaviour, these bureaus rate the individual. If the individual has been frequent in paying their dues, his credit health would be considered as good. On the other hand, if the individual has been defaulting the dues or not making the payment in time, his credit health would be considered as poor. 

Individual with good financial strength can have good credit score. Even individual with good financial strength can have a low credit score and poor credit health. Individuals with bad credit health can face many difficulties in the future.

This is also the truth that, people who are financially strong are careless regarding their payments. Being careless about their payments can turn themselves into defaulters. Defaulting on payments can have a negative impact on the credit report of the individuals. 

So, individuals who are financially strong should be careful with their payments. They should also see to it that they pay their due on time to avoid any negative remark on their credit report. 

Due to the negative remark on their credit report, their credit score gets low and their credit health becomes poor. The lowering of credit score and poor credit health can also lead to financial loss. 

Individuals with low score and poor credit health pay high interest rates on loans as well as on credit cards. To avoid payments of high interest rates, they should make efforts to improve their credit score and be credit healthy.

To improve their score and make themselves credit healthy, individuals can take the help of credit health management companies. These companies assist individuals to improve their score and maintain their credit health.
Visit: www.cibilconsultants.com
Source: Secondary