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The Impact Of Credit Scores: How Can It Affect Your Ability For Financial Aid

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Maintaining healthy spending habits is a challenge that many of us face in our lifetime. Not only do we have monthly bills to cover but other expenses often creep up on us when not monitored closely. Whether it is an unexpected breakdown or overspending on subscriptions, this should all be monitored to ensure you are spending your money wisely. In this article, we will be looking into the impact that a bad credit score can have on your ability to receive financial aid.

In Can Increase Interest Rates

One of the biggest problems with a poor credit score is that it can impact the interest rates that you are faced with the worse your credit score is, the higher the potential interest rates can be. Whether this is a car finance loan or a payday loan to see you through financial difficulty, this can all be affected as a result of a poor credit score.

Can Affect Your Ability To Be Accepted For Loans

In addition to affecting interest rates, it can also have a profound effect on your chances of being accepted. With hard inquires staying on your credit score for up to 2 years, these and existing debts can appear against your name during the initial eligibility checks. Though there are bad credit guarantor loans to provide credit to those in desperate need, it is important to make sure that you are removing existing debt and improving your credit score to better your chances at receiving emergency financial aid in the future should you need it.

It Can Negatively Impact Your Mortgage

If you are someone that either has a mortgage or is in the process of applying for one, you must have a positive credit score. This is because a negative credit score could mean a higher mortgage rate as a result. This is because many lenders will look at your poor credit score and assume that you cannot afford to buy a home, this means that your mortgage may be more than those with a much more positive credit score. To prevent this, it may be worth paying off debts and organising a significant line of credit before applying for a mortgage as this will show to lenders that you are in fact financially stable.

Student Loans And Credit Score

It is important to note that those that have been to university may well carry some form of student debt with them. However, this is not part of your credit score and will therefore not show up when it is checked. However, some lenders suchas mortgage brokers may ask you about any student loans when applying as part of their eligibility checks. But don’t worry, this is not likely to affect your credit score or chances of being accepted.

With this in mind, there are several reasons why a positive credit report is so vital, particularly in these trying times. So before applying for any form of loan why not set about improving your credit score today?

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