Does Gambling Affect Credit Score?
Do you have a question in mind that does gambling affect credit score? You are at the right place. Continue reading to know more.
Finances are an inescapable phenomenon in human existence, and the state of a person’s finances is largely influenced by the decisions they make. Credit scores occur when the totality of an individual’s income is valued against expenditure, as well as the consistencies in repaying loans and paying bills.
Are you looking to take a loan anytime soon? Are you a gambler? Do you wonder if gambling will affect your credit score and ultimately influence whether or not you are perceived as creditworthy by a lender? This article has all the answers you need.
Starting with a detailed expose into the two concepts at play, this piece will weigh the effects of gambling on your credit score, if at all.
First of all, what is gambling all about?
Gambling, also known as betting or wagering, is the act of participating in a game of chance with something at stake. In the past, anything could be used as a stake, but most popular in the history of gambling is one of mankind’s most valued possessions: money.
You may be familiar with the most common types of gambling, but it is important to establish the aim of this age-long activity: Outcome.
In spite of having a long history of being despised, regulated curbed and eventually legalized in some countries, the basic rule of gambling has never changed. The rule of gambling is that the player ends up with one of two possible outcomes: losing their money at stake or winning a lot more—the money of those who lose that round. While luck is perceived as the ultimate decider of outcome in gambling, it is also dependent on the player’s skills and tact.
The advent of the internet and technology has seen the emergence of many online gambling platforms, and consequently, governments have had to impose regulatory legislations like taxation and other charges on such platforms to ensure continued operations in their countries. Legitimate online sites offer the same services as casinos and other betting companies, and altogether, the gambling industry is booming for both players and companies.
That established, gambling may or may not be a profitable venture to the player, but what does it matter to your credit score?
It should be noted that your credit score is the commonest way that a lender can ascertain your willingness and financial capability to repay a loan. In essence, once it is decided that you don’t measure up to the lender’s standard; your loan offer may be turned down. This cannot feel good for anyone who needs funds.
A credit score may be defined as a number typically between 300 and 850 that shows a potential borrower’s creditworthiness, The Fair Isaac Corporation (FICO) model is the most commonly used by financial institutions in calculating a person’s credit score, and this is the standard value:
300 to 579: Poor Credit
580 to 669: Fair Credit
670 to 739: Good Credit
740 to 799: Very Good Credit
800 to 850: Excellent Credit
Does Gambling affect Your Credit Score?
Yes, and no. Here’s how: on paper, your credit score will not dip just because you gamble; neither will a lender turn you away just because you have gambled a few times before your loan application, or if you gamble frequently.
On the flip side, you may find indirect consequences of gambling on your credit score in certain scenarios highlighted below:
- Frequent gambling may lead to addiction and debts. If you take out loans to pay off these debts and are unable to pay them back, your credit score will tank. In this scenario, your gambling debt is the source of that financial constraint and has affected your credit score indirectly.
- When you apply for a loan and your account statement and other records are accessed by the lender, some check through your transactions for traces of frequent transactions with betting websites and other gambling platforms. If you want to take a mortgage loan, lenders that give out such loans may consider your frequent gambling habit a red flag. This may not affect your credit score if you don’t have any gambling debts, but it will affect the perception the lender has of you, and by extension, affect your chances of getting your loan approved.