Effects of Financial Crisis on Credit ScoresMay 13rd, 2017
Financial downturns can impact your personal credit decisions. Certain unavoidable circumstances like the sudden loss of a job, bad financial decisions or personal issues leading to economic instability can leave anybody with a bad credit score. Everyday working people are frequently caught up in difficult situations that can lead to bad credit scores because of changing needs and priorities.
Falling on Hard Times
When home values fall below mortgage debts, consumers prioritize their credit card payments over their mortgages which in turn hurts their credit scores. Missed and late payments during such times can lower your scores immediately.
Credit Over Cash
Financial distress can translate into missed payments, and your account being in collections also puts a lot of strain on your credit health. Ironically, those who are the most cash-strapped are also the ones who need good credit the most. So it can be very strenuous to pay bills and keep your credit scores in shape. Bad economic times impact your resources and daily needs which in turn puts a strain on the credit system.
Influence on Lenders
An economic downturn makes many lenders cautious. Monthly income is often ignored and lenders will rely solely on credit scores to decide a customer’s ability to repay loans. However, in recent times, new auto loan lenders have started considering cash flow again in their underwriting. By looking at monthly cash flow, they check if finances are managed well and will offer bad credit car loans if your credit scores don’t match your budgeting abilities. We help rebuild credit history and boost credit scores with a bad credit car loans in Nova Scotia.
It’s worthwhile to keep your credit scores in mind and to take steps towards making them healthy by making timely payments, utilizing credit cards carefully and keeping a good mix of accounts.