Last Updated on August 2, 2022 by Umer Malik
Your credit record is one of the most essential factors when you take any type of loan. It shows your lenders how you are when it comes to your payment responsibilities. A responsible person would always want to keep his/her credit record in good shape. Having a good credit record may help you prevent future loan disadvantages and may even help you avail exclusive deals from lenders.
When you take a personal loan, it may affect your credit record and vice versa. It is best to know how these two things may affect each other for you to avoid the negative effects and avail the positive ones. Keep on reading to learn about the common effects that they may inflict on each other!
There are also personal loans for foreigners in Singapore.
Common Scenarios on How Your Credit Record and Personal Loan May Affect Each Other
Hard Inquiry During the Application Process
– When you apply for a personal loan, your lender may perform a “hard inquiry” on your credit reports. A hard inquiry is when your lender checks and reviews your credit records for them to see how you are when it comes to your payment responsibilities. Because this inquiry is connected with an ongoing loan application, it will be considered a hard inquiry. Unfortunately, hard inquiries will most likely be reflected on your credit report and may also negatively affect your credit score. A hard inquiry may stay on your credit record for a few months or at most over two years.
Impact on Application and Loan Deal Caused by Credit Record -.
As you may already know, your credit record has an impact on your loan application. An exceptional-looking credit report may unlock exclusive deals for you as a reward for being a responsible payor. On the other hand, a poor credit record may even get you rejected as a loan applicant. Don’t be discouraged if you have a poor credit record though. Terms and conditions may vary from one lender to another. Some lenders do offer personal loans for those with not-so-good-looking credit records but do expect deals with higher interest rates and maybe more requirements, such as collaterals.
Impact on Credit Score Caused by Repayments –
As your credit record affects your personal loan application and the deal that you may get to avail, your loan will also affect your credit score. Your attitude towards your loan repayments may either build up your credit record or break it up. Paying on time and just being a responsible client will help you improve your credit score while slacking off with payments will tear your credit score down.
Your credit record, your credits, and your loans are in a cycle. How you treat your current credit or loan will be reflected on your credit record. Your credit record will affect your future credit or loan applications. For the sake of your future self, it is best to be a responsible payor now and thank yourself later!
Learn more about debt consolidation loan in Singapore now!
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