What is a CIBIL Score?
A CIBIL score is a numeric value showing the value of your credit score. This may vary between 300 to 900.
A CIBIL score of 750 or above is considered a good credit score used to apply for different kinds of credit facilities like credit cards, or even personal loans.
CIBIL score is calculated based on your previous credit history. It depends on your financial performance including your repayment history of previous loans.
If you have a good CIBIL score, you will have many benefits like getting quick approval on your loan or having a loan with a lower interest rate.
It is the most primary factor considered by the lender to offer you a loan or a credit card.
Effects of a CIBIL score.
- Low-Interest rates – A good credit score gives you the benefit to get loans with a lower rate of interest.
Different financial institutions provide you with credit facilities based on your CIBIL score. If you have a good CIBIL score, the chances of getting a loan increase along with different benefits.
The chance of having a lower interest rate is that you can lessen your interest burden on the amount of loan taken. Otherwise, the interest component just keeps on increasing along with the amount of loan.
Lower interest rates can be achieved by keeping a good CIBIL score in hand. It can be improved by improving your credit performance.
It is a benefit if you have a credit score of 900 or above.
Even a little change in your interest rates give a great change in your EMI amounts which further impacts your finances.
- Quicker approval – A good CIBIL score gives you a chance of getting approval on your loans a little faster.
As your CIBIL score is an indication of your creditworthiness, it gives assurance to your credit lender about your credit performance.
This allows the lender to check in for fast approval of the application of your loan. This is mainly helpful if you need a loan for any emergency purpose.
A high credit score also improves your chance of getting approval for a personal loan or a credit card.
Having a CIBIL score of 750 or above helps the lenders in making quick decisions regarding the approval of your loans.
- Power of Negotiation – If you have a good CIBIL score, you will be in the power to negotiate with your lender regarding different aspects like credit limit, interest rates, amount of EMI, etc.
Applications with more CIBIL score favours lenders to get a positive impact on the approval of your loan amount.
This gives an advantage to the borrower to negotiate with the lender regarding the terms of the loan.
The processing fee of the loan is also negotiated with the lenders. If you have a very good CIBIL score, you can be provided with a chance of having no processing fee.
- Higher Credit Limit – Having a higher credit score can also increase your chance to get a loan for a higher amount of credit limit.
A limit on your credit card is based on your credit score as it records your credit history in different aspects.
Your credit history affects your credit limit on different loans like personal loans or credit cards.
This is because a higher credit score assures your lender that you have responsible credit behaviour previously. They would feel it riskless to provide a higher loan amount to you.
- Pre-approved loans have better access – If you have a good credit score, you will increase your chance of getting a pre-approved loan amount.
They are offered by banks to their existing customers. So, if you have a good credit score, that would help the bank to assure your credit performance.
Pre-approved loans may, however, not be offered to every customer of the bank.
Many verifications happen regarding your credit score and your account balances with a giveaway to a pre-approved loan offer.
This pre-approved can be given to your bank or even for a credit card if you have a good credit score.
- Credit cards with better benefits and rewards – There will be cashback or many other reward programs given by your credit card lender if you have a good credit score.
The important thing that your lender checks before approving your credit card application are your EMI to income ratio linking to your repayment capacity.
So, it is beneficial to have a good credit score to avail of these special benefits.
- Easier access to premium credit cards – Premium credit cards are the type of credit card that offer exclusive benefits to the users.
Your credit score is the one thing that gives your lender interest to offer a premium credit card with extra benefits like reward points, good cash backs, privileged services, etc.
- Get loans with higher tenure – Tenure of a loan is the period in which your loan has to be repaid.
If the tenure of the loan is longer, it becomes riskier for the lender about your loan amount.
But, if you have a good credit score, that might help you get a longer tenure for your loan amount.
This gives a benefit that if the loan is repaid over a longer tenure, this gives you a small amount of EMIs.
Their wont is much burden on you in the form of those EMIs.
There is an additional benefit that many recruiters get a positive impression of your credit profile if you have a good credit score.
It is always beneficial to maintain a good credit score. It benefits in many ways financially to the person who wishes to take a loan.