Loans and Gambling: Does It Impact Your Credit Rating?
A credit card is an important tool for financial transactions, which works on the basis of deferred payment. This means a Credit cardholder can borrow money from a Credit-card issuer within a certain predefined credit limit and can repay it back in instalments, later.
Gambling Sector and Credit Card Ownership: An Interdependent Relationship
The market size of the gambling sector is projected to rise from 711.4 billion U.S.D in 2020 to 876.0 billion U.S.D by 2026, as estimated by a report issued by Global Industry Analysts Inc., with the fastest growing market in the United States (U.S.). About 79% of U.S. citizens owned at least one credit card in 2020, according to the data published by the Federal Reserve Bank of Atlanta.
A credit card is one of the prime modes of gambling transactions. However, a credit card is more of a bane, less of a boon, at times. A player should be careful while using a credit card during gambling. However, the CasinoGap betting portal presented a lot of reliable credit card betting sites. Credit cards can be a source of money during gambling, but one should be aware of the downsides of using credit cards while gambling. This article will be throwing some light on the effect of gambling on credit card ratings.
Does Gambling have an effect on Credit Card Rating?
First and foremost, ‘What is a Credit Card rating?’ Credit Card Rating is a metric to measure the ability of a money lender to repay the money back to the borrower. There is no direct relation between gambling and credit report. However, the frequency of borrowing money via credit card during gambling will have an impact on the credit card score. Here are a few incidents that create a negative rating in credit score:
Payment after scheduled time or Late Payments and Missed Payments
The history of payment of the borrower is an important factor to determine credit card ranking. The missed payments are recorded by the lending agency which negatively impacts the credit score.
Dependence on Cash advances
Cash advances during gambling come with a huge rate of interest (usually around 25%) and a cash advance fee (about 3-5%) is also applied in addition to that. Moreover, in the case of online gambling, there is an extra charge that is to be paid to the site for money transfer.
Gambling exceeding the credit limit
There is a particular credit limit set for a credit card. If a player overspends the money, by crossing the credit limit, that would add up to the woes of the player as this would be negatively reflected on the credit rating.
Presence on Electoral Roll
Credit-lending institutions check the record of the borrower and the presence of the name of the borrower on the electoral roll when the borrower applies for the credit card. If the name is not there on the electoral roll, that would be a dent in credit rating. Registration for voting is therefore recommended while applying for a credit card.
Demanding Unnecessary Bookmakers Credits
Gambling credit is offered by the betting sites in the form of credit card solutions, also known as markers, used while playing, without the necessity of using cash. This is being retrieved later from the bank account of the player. If the bank account balance is not sufficient, the account will be closed and this will be a negative impact on the credit score.
Absence of Credit History
A credit score is also based on the duration of time the credit card is being used by the borrower; if the credit history is short or there is no credit history, that substantially decreases the credit card rating. The suggestion is to utilize at least one credit card and repay the money back within the scheduled time.
Does Gambling Create an Adverse Impact and Narrow Down the Chances of Getting Loans?
It has been discussed previously that there is no direct effect of gambling on credit card rating. If the borrower repays back the money within time and controls gambling via credit card, there is no decrease in credit score. But, if a gambler gambles excessively and is unable to repay back the debt, a loan default is added. The effect of this loan default is displayed in the credit card rating. This causes the hesitation of the lenders to approve loans to such gamblers. Owning multiple credit cards is therefore often a matter of discredit.
Does Gambling decrease the chances of Getting Mortgages?
Credits are of two types: a. Instalment Credit and b. Revolving Credit. Mortgages are instalment credits, which means, the money that is borrowed is repaid back in instalments over a certain period of time. A thorough credit history investigation is performed by the money lending institutions and the bank account statements of the applicant, for the past six months, are also checked. The gambling habits will hamper the bank account of an overindulgent gambler, thereby lowering the credit score and the applications for mortgages will not be sanctioned by the lending authorities. Thus gambling debts decrease the chances of obtaining mortgages.
There is a bitter-sweet relationship between the lender and the gambler who likes to bet on sports such as football or basketball. The lenders perform credibility studies of applicants before approving loans or lending money. It is therefore suggested to carefully use credit cards for gambling and to avoid using credit cards before applying for loans as bank details for up to six months are asked for. The credit Utilisation ratio is the percentage of money that is being utilized out of the total credit of the borrower. It is advised to maintain a Credit utilization ratio below 30% to keep a good credit score and not to use credit cards frequently for gambling.