Credit score is a gradation of an individual’s creditworthiness. Financial institutions look at a borrower’s credit rating to assess the risks associated to lend them the required funds. The rating is a three digit number, ranging from 300 to 900. Credit bureaus like CIBIL create the report based on your credit history every year. If your credit score is 750 or better, lenders will consider you as a worthy applicant to get instant personal loan.
A decent CIBIL score guarantees various benefits for the borrower. If you know how CIBIL score is calculated, you must know that it evaluates your credit history, credit utilisation ratio, number of outstanding loans, the ratio of secured and unsecured loans in your debt portfolio, etc. Consequently, someone with a good score enjoys advantages on various aspects influenced by these factors.
Let’s take a look at 7 benefits you will get if you maintain a good credit score.
- Improved chances of loan sanctioning – Better credit score indicates that you are a reliable borrower and have a higher chance to repay the advance over time. Your loan application will have a better chance of approval if you have a high CIBIL score. It is mainly apparent for unsecured credits like a personal loan. Financial institutions will readily provide you with an advance as you are less likely to default or miss a payment.
- Higher credit limit – Credit limit is directly proportional to your monthly income and CIBIL score. If you have a good score, lenders will offer a higher loan limit. This is especially helpful when you get instant personal loan or even a credit card. You can avail up to Rs. 25 Lakh as a personal loan if you have a decent CIBIL score.
- Lower interest rates – The interest rate of your loan is directly related to your credit score. With an excellent CIBIL score you can almost always qualify for the best interest rates on personal loans. You can even bargain with the lender for a lesser interest rate. The lower interest rate will not strain your budget during the loan tenor.
- Easier approval of credit cards – It is easier to get a credit card if your CIBIL score is above 750. You might also enjoy various promotional offers and discounts along with a higher upper limit and attractive interest rate.
- Quicker approval for financing – A lender is likely to approve your request for financing much quicker if you have a higher credit score. You can get an instant personal loan, a credit card, or a secured loan such as home loans, car loans, etc.Various financial institutions might even provide you lucrative offers and beneficial terms if you meet the criteria. Lenders like Bajaj Finserv provide pre-approved offers for personal loans, home loans, business loans, and a range of other financial products and services. Such offers save time when you apply for financing and make the process simpler.
- Flexible loan tenor – You can negotiate a longer tenor if you have a higher CIBIL score. A lender will be more comfortable providing the finances for longer as you have a history of timely repayments and no defaulters. You can choose between 12 to 60 months of tenor when you get instant personal loan. A longer tenor will decrease the EMI burden easing up the repayment process.
- Adding value to your visa application – Good credit score can even add value to your visa application. Countries like the US, UK, require detailed financial history records (including tax returns) when you apply for a Visa. A good CIBIL score can get an approving letter from your bank, which can further leverage your visa application.
Although different institutions have different criteria depicting precisely what is a good credit score, a rating of above 750 is considered good enough to meet most requirements. It plays a critical role in helping you secure credit quicker, and in favourable terms.