If someone were to ask you whether you want to maintain good financial health, it’s highly likely that you would say “Yes, of course!” However, do you have a clear idea of why exactly it’s important to have a good financial health record? Your financial health isn’t just limited to the results of your credit score on a piece of paper. When it comes to your credit score and thus your financial health overall, there are practical effects of good or bad financial history that can leave a noticeable impact on your daily life.
Let’s take a look at the different ways in which having good financial health can positively impact your life.
Higher chances for loan or credit card approval
Your financial health comes into play most significantly when you are making an application with your bank – this could be a personal, hire-purchase, housing, or business loan, or even an application for a credit card. If you have a good credit score and financial health rating, banks will see you as a lower risk and are more willing to lend you money – so your chances of getting approved are higher. If you’ve ever wondered why you’ve been rejected for a loan or credit card application before, the state of your financial health is probably the reason why.
A faster application process
Just like with your chances for approval, having a good financial health record will encourage the banks to speed up your application process overall. After all, if you have a high credit score and solid debt repayment history, your application won’t have as many roadblocks and hurdles to go through. This means that banks are able to spend less time weighing you up as a candidate before stamping “approved” on your loan or credit card application.
You have more options
Have you ever applied for a credit card with benefits that perfectly suit your needs, only to be rejected and told that you are better off applying for another card instead? Well, this is what happens when you have poor financial health – banks tend to view you as a risky customer and you might not be able to get the specific product that you want because of it. However, if you have good financial history to back you up, most banks will be happy to deal with you and your options can be a lot wider.
Get higher credit limits
You are probably aware that banks determine credit limits based on your income; if you earn more in a year, you are more likely to get a higher limit on your credit card or be offered a bigger amount on your loan. However, banks also take into account the state of your financial health when it comes to determining your credit limits. If you have a good credit rating, it will be easier for them to trust you with a higher credit limit.
Better negotiating power
Sometimes, the occasion will arise where you want to ask your bank for more flexible payment periods or lower interest rates, especially when it comes to high credit amounts. When this happens, you will find that having a promising financial track record to back you up will put you in a much better bargaining position. As we’ve highlighted above, having positive financial health means that you are less of a risk to the bank, and this comes in handy when you need to negotiate with them.
It can even help with employment
Did you know that some employers in countries like the United States actually check for credit score as part of their hiring process? While this isn’t exactly the norm here in Malaysia, it means that having poor financial health could actually affect your chances of getting hired! While this concept may sound surprising to you, it does make sense – after all, individuals with good financial health are seen as prudent and responsible, which are good traits to have in the workplace.
So, yes, it’s a big deal
As you can see, your financial health is vital when it comes to important dealings that you have with the banks. You may think that credit card or loan applications are just one-off events that you have to deal with, but the impact of these applications and loans are far-reaching.
Good financial health can be your key to getting a credit card with all the best cashback benefits and features that you need. Bad financial health can be the reason why you have an incredibly difficult time getting a loan for the house of your dreams instead of a smooth and painless process. Put simply, yes – your financial health matters!