Why is good credit so important? A good credit score is used for more than just getting a credit card or a bank loan. Your creditworthiness demonstrates your history of paying your debts to entities that loan you money.
A good credit score is important for businessmen and investors as they have to deal with banks on multiple occasions on a regular basis. Bad credit, on the other hand, will make it difficult to get a loan or a credit card.
So, building and maintaining a high credit score may have a significant effect on your quality of life and your future investments.
Benefits of good credit
There are many benefits to having good credit, here are ways in which good credit can make your life easier:
1 Faster Credit Approval
Banks and lenders are more likely to approve your loan applications, if you have a good credit score. So when you apply for credit cards, loans or mortgages, banks will be more likely to accept your application and you may spend less time waiting to hear the results of your application.
2 More Options For You To Choose
The bank will always check your credit status first when you apply for a loan on a property or take any type of loan. The bank will refer to your credit score and payment history to determine how trustworthy you are - whether you are financially stable and able to pay back your debt in a timely manner. Once they have confirmed your credit score, they will offer you better loan options and rates.
3 Ability To Diversify Your Investment
A good credit status means that you have the flexibility to diversify your investments and enhance your returns.
For instance, when you buy a second-hand apartment that costs RM 160,000, after that, maybe you can refinance it around RM 130,000 to do other investments.
4 Better Chance To Get Higher Credit Limits
Banks and lenders will look at your income and credit score before approving your credit applications, so the amount of money you can borrow depends on how much you earn. But, one of the major perks of having a healthy credit score is that it’s easier for a bank or a lender to trust you with a higher credit limit.
A healthy credit score can speak volumes about your ability to repay your bills on time. So, you can use it to your advantage on those occasions when you need a one-time or a permanent credit limit increase.
5 Yielding Extraordinary Returns
During an economic downturn, property prices could drop or ''below market value'' properties will appear as markets react in panic. These circumstances will offer massive opportunities to investors with a strong credit rating. As during these times, investors who have cash in hand or with a strong credit score are deemed as fundamentally strong by the banks. They enter the market more easily than others.
Hence, banks tend to offer additional credit lines to the investors who have a strong credit score than those who have a low credit score. Thus, the rich will get richer.
As a property investor, you have every right to make the most out of your investment ventures. Don’t let obstacles like a bad credit report or a bad credit score get in your way. Keep your credit status high and the rest will go smoothly.
If you are interested in investing in commercial properties, feel free to chat with us.
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