Your creditworthiness and historical credit behavior are briefly reflected in your CIBIL score, providing lenders with valuable insights during the loan approval process. A favorable CIBIL score significantly increases the likelihood of your credit application being approved, positioning you as a low-risk borrower in the eyes of financial institutions. A CIBIL score of 750 and above is typically considered good, granting applicants greater ease in accessing loans or credit cards. Furthermore, a high CIBIL score serves as evidence of your responsible credit conduct, further supporting your prospects for loan or credit card approval. By maintaining a high CIBIL score, you unlock a multitude of benefits that come with this positive financial reputation.
6 Benefits of a Good CIBIL Score
1. Higher Chances of Approval
Having a solid credit score reflects a commendable approach towards managing credit, a consistent history of timely repayments, and a reduced likelihood of defaulting on payments, thereby minimizing the risk for lenders. Consequently, maintaining a high credit score significantly enhances your prospects of obtaining loan approvals or higher credit card limits, demonstrating your responsible credit behavior and financial reliability.
2. Low-Interest Rates
Having a high credit score can lead to significant advantages when applying for credit, such as a personal loan, home loan, or credit card. Applicants with higher credit scores tend to receive lower interest rates from lenders. This means that if you have a good credit score, you can enjoy the benefit of securing a comparatively lower interest rate on loans. This seemingly small difference, even as little as half a percentage point, can have a substantial impact on your monthly installments (EMIs) and, consequently, your overall financial well-being. Therefore, individuals with high credit scores can take advantage of loans with low-interest rates, which is especially beneficial when considering options like a 1 lakh personal loan.
3. An Improved Negotiation Power
Lenders have a strong preference for granting loans to individuals who demonstrate creditworthiness and the ability to repay their debts and credit card balances in a timely manner. When applicants possess a good credit score, they become highly sought-after borrowers, gaining a significant advantage over others. This advantageous position allows borrowers to engage in more favorable discussions with lenders, securing better credit terms and lower interest rates. Moreover, in certain instances, borrowers may even request the elimination of loan processing fees.
4. Easier Access to Premium Credit Cards
Before granting approval for a credit card application, lenders closely evaluate the applicant’s credit score, considering it as one of the primary factors. This assessment significantly influences credit card companies’ decisions to offer premium credit cards that come with enhanced benefits, such as lucrative reward points, attractive cashback opportunities, and a host of exclusive services. By prioritizing applicants with favorable credit scores, these companies aim to provide a more rewarding and personalized credit card experience, ensuring that customers can enjoy a range of privileges and perks tailored to their financial needs and aspirations.
5. Loan with Long Term
Having a strong credit score opens up opportunities for obtaining loans with extended repayment terms. By opting for a longer-term loan, you can enjoy the benefit of reduced monthly payments. This alleviates the burden of repayment, enabling you to fulfill your loan obligations within the designated time frame. It is essential to familiarize yourself with the process of checking your CIBIL score, which plays a pivotal role in determining the approval of loan applications. To do so, you can conveniently access the official CIBIL website and complete the online application form, often accompanied by a nominal fee. Understanding how to monitor your CIBIL score empowers you to make informed decisions regarding loan applications.
6. Increased Access to Pre-approved Loans
Securing a pre-approved loan from a bank provides a convenient and swift means to obtain a personal loan. Nonetheless, it’s important to note that not every customer is eligible for such loans. The bank sets a credit score threshold and conducts thorough scrutiny of your account balance before extending a pre-approved offer. Having a favorable credit score significantly increases your likelihood of qualifying for a ‘pre-approved’ and ‘personal’ loan from your bank or credit card.
Final Thoughts
Having good credit is essential for financial stability and success. It opens the door to better loan rates, higher credit limits, and more opportunities to invest in your future. By paying bills on time, keeping your balances low, and monitoring your credit score regularly, you can maintain a healthy credit history that will benefit you in the long run. So take control of your finances today and start building positive credit habits. Your future self will thank you!
Author Bio: Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds. Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.
Smrutirekha Bhoi