Importance of a Good CIBIL Score

Availing of loans can be a convenient of securing funds to meet housing or personal requirements. While extending loans, lenders assess an applicant's eligibility based on several factors such as age, income, and employment type, among others. One of these significant factors is your CIBIL score – a three-digit numeric summary reflecting your credit behaviour. A high credit score, typically above 750, is preferred by the lenders. If your credit score is below 750, take corrective measures to improve it before applying for a loan.

In this article, we discuss the benefits of having a good credit score. 

Here’s How a Good CIBIL Score Can Prove Beneficial

1. You Can Get Approved for a Loan Quickly 

A high CIBIL score demonstrates your creditworthiness. Applicants with a high credit score are seen as responsible borrowers who are unlikely to default on EMI payments. This can improve the chances of getting approved for a loan quickly. Moreover, a strong credit profile can enhance your ability to negotiate better terms such as lower interest rates and higher loan amounts. 

2. You Can Get Offered a Better Interest Rate 

When it comes to loans, especially big-ticket loans, such as a Home Loan or a Loan Against Property, the interest rate is the key factor that determines the feasibility or the cost-effectiveness of the loan. Low interest rates not only make the Home Loan EMIs manageable but also allow borrowers to save on the interest outgo. Lenders can extend low-interest-rate Home Loan deals to borrowers who have a good CIBIL score, preferably above 750. 

3. You Can Access a Higher Loan Amount 

Having a good CIBIL score enhances your access to higher loan amounts primarily because it indicates a strong credit history. Borrowers with a high credit score are likely to repay borrowed funds responsibly. As such, lenders can offer higher loan amounts to borrowers with good credit scores. 

4. You Can Negotiate for Better Terms

Borrowers with a CIBIL score of 750 or above are in a good position to negotiate for better loan terms such as low interest rates and higher loan sanctions.

5. You Can Get Access to Exclusive Offers

Banks and financial institutions may offer you higher credit limits on credit cards or approve your application for premium credit cards with exclusive benefits and rewards.

Final Words

With a CIBIL score of 750 or above, you can have a better chance at securing loans and credit cards are feasible terms. However, in case your CIBIL score is below the ideal score, you can try improving it by paying credit card bills and EMIs on time, maintaining a low credit utilisation ratio, keeping a check on your co-signed loans, and checking your credit reports for errors regularly.

Also Read: Tips to Maintain Your Business CIBIL Score Above 700