Gaming activities do not directly show up on your credit report nor do they directly leave an impact on your credit history. However, certain financial behaviors associated with it can put gamblers in a tricky financial mess which makes it harder to stay current on debt obligations and bills. If one is struggling with the financial ramifications of gambling tendencies, he can approach debt resolution methods as well.
Does Gaming Affect Credit Scores?
Gambling is a favorite pastime in the UK. Whether it is about wagering on the spin of a roulette wheel or placing a bet on the horses, the advent of technology such as RNG (Random Number Generators), SSL, Two-Factor authentication, HTML5, CSS3, and Responsive wetsuits, has made gambling very accessible across the globe, irrespective of devices.
Millions of players, especially in the United Kingdom, use credit cards for gambling. They start gambling online with credit cards and sometimes play beyond the credit limits. This may cause some consequences in the future. Even though gambling does not majorly affect the credit score, behavioral patterns associated with gambling could build up debts that do impact credit. These include :
Cash advances from a credit card could be a prime way to build up interest. Fees on cash advances generally add up to 3-5% of the advance and interests gather up immediately. Interests and fees can cause cash advance charges to rise rapidly.
If funds are tied up in gambling debts or payments, one might find himself missing payments for other things. Missed payments are directly reported to credit bureaus which can affect credit scores. If a punter defaults on an account and it is sent to the collections, the information might appear on the credit score which would lower the score.
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Increase In Credit Utilisation
Credit utilization reflects how much a punter’s available revolving credit is used. It is important for credit scores and high utilization of credit can drag the scores down. Keeping the utilization below 30% can prevent major harm to the credit score.
Casino Line of Credit
Casinos often grant lines of credit to their punters. This could result in an inquiry on the credit file which again temporarily drops points.
Payday loans have sky-high fees and as per Consumer Finance Protection Bureau, a typical Payday loan has a 400% APR. The average APR is about 16% as per the latest 2021 data from the Federal Reserve.
What Do We Mean By Credit Rating?
To understand how gambling affects the credit score of a punter, we need to look into what a credit score is. It affects everything from purchasing a mobile phone to securing a mortgage for a house. The credit score consists of information about the borrowing habits of a person. It allows lenders to look into this to understand how a person tackles his money.
This information contained in the credit report helps in building up credit scores. There could be an indirect impact on the credit score due to gambling. Your credit report and credit score speak about your habits when it comes to any borrowed money.
Gambling might lead to irresponsible spending which could eventually turn into an addiction. If a punter has controlled gambling habits with odd bets, it is absolutely fine. However, addictive gambling might push you into overdraft limits or force you to borrow more amounts which in turn affects your credit score.
Debt Resolution Methods
Debt Snowball Method: With this method, one could build up momentum by paying off debts starting off with smaller amounts and progressing eventually.
Debt Avalanche Method: This method can be used to pay off the account with high-interest rates first to save yourself the most out of debt repayment.
Balance Transfer Credit Cards: These cards allow you to transfer existing balances to a new card and pay a low APR initially. This interesting period is for a year or so during which one can pay off debts quickly.
Debt Consolidation Fee: A debt consolidation loan lets a punter consolidate multiple debts into a single loan payment at a lower interest rate as well.
Do Lenders Know If Punters Gamble?
There remains no trace of one’s gambling on his credit score. One might think that how gambling affects the credit score of a person. When it comes to gambling affecting the ability to borrow, a lender might ask to see the bank statements. For mortgage applications, it is common for lenders to check three months of bank statements.
The takeaway on credit score is that, like so many things in life, gambling in moderation seems to be okay. If a person has control over his gambling habits and controls his expenses, it does not impose overdrafts or loans. While gambling does not directly impact the credit score, it can show on bank statements at times.
However, you can always find some alternatives to this payment method and do not worry about your credit score. Lenders often consider these factors while deciding whether to lend money or not. The National Council On Problem Gambling NCPG states that excessive gambling is more of an emotional problem with financial consequences.