How can a strong credit score benefit you? What is the significance of a credit score? How to increase CIBIL score fast? If you are seeking an answer to these questions, you seem to have arrived at the correct place.
A credit score is nothing but a 3-digit number that is assigned by the bureaus like Experian, CIBIL, CRIF High Mark and Equifax. This number is based on the credit history and considers your current credit behavior. Credit scores range anywhere from 300 and 900. The higher your credit score is in India, the more responsible is your behavior towards credit.
All financial institution’s lenders first review your credit score to take the decision of whether to approve your credit card or loan application. Thus, a strong credit score is crucial to easily avail a credit card or loan approval. There are various benefits linked with having a high credit score.
Listed here are few of the top benefits of having a strong credit score:
- Lower rate of interest
In India, lenders have started providing loans according to the loan seeker’s risk profile. This specific move has ensured that the applicants who have an excellent credit score can get a lower rate of interest, which results in lower loan costs. This is crucial as even a half percent reduction in loan interest rate can considerably impact your loan EMI and subsequently result in financial savings. Thus, one of the advantages of a strong credit score is cheaper loans and other credit forms.
- Faster credit approval procedure
A strong credit score is a sign of an individual’s credibility. This permits lenders to make instant decisions concerning credit-linked applications and assists applicants when they face any financial exigency. A good credit score even means instant access to funds via faster credit application approval.
- Ameliorated negotiation power
Lenders often prefer to lend only those applicants who are creditworthy, i.e., those who have the potential to repay the credit card bills and loans instantly. Customers who have a strong credit score are desirable borrowers as per lenders, who get an edge over various other loan seekers. Also, this assists borrowers is simply negotiating with lenders for lower interest rates and better credit terms. In such cases, borrowers can even request for loan processing charges to be waived.
- Higher loan amount
Higher loan amount converts to enhanced risk for lenders. It is because of this reason lenders insist applicants have a strong credit score. With an excellent credit score, lenders are assured of timely repayments and might be willing to provide a higher loan amount.
- Higher credit card limit
Credit card limits usually are determined based on your current income and credit score. A strong credit score makes it possible for credit card issuers to raise their credit card limit. This is major because a strong credit score shows responsible credit-linked behavior on the part of credit card users and thus lowers the risk element for the credit card issuers.
- Easy accessibility to pre-approved loan
A pre-approved loan permits accessibility to quick loans when required. However, such loans are not available to all the seekers. Banks conduct a detailed scrutiny wherein an in-depth check of your score, account balance etc., are done before offering you a pre-approved loan. In case you have a strong credit score, there are good chances of you availing of a pre-approved loan from top banks.
- better chances of getting longer repayment tenure
A higher loan repayment tenure leads to lower EMI, which can assist in easily managing monthly finances. However, as per the lender’s point of view, a longer repayment tenure of a loan can be risky. With a strong credit score, you can easily avail approval for a longer repayment tenure and lower your EMI burden.
Conclusion
With every passing day in India, the importance of a high credit score of 750 and above is rising. While we mentioned just 7 crucial benefits of an excellent credit score, there are many other benefits that you can get while availing of a form of credit or loan. Maintaining a strong credit score helps make your life simpler and permits access to various financial services and products. If your credit score is low, you might want to start ameliorating it as soon as possible.
FAQs (Frequently Asked Questions) about credit score
What is a PAN card CIBIL score?
There is nothing such as a PAN card CIBIL score. However, you can use your PAN card number to check your CIBIL score online in the financial lending markets. CIBIL credit score is a 3-digit numeric summary of your credit history. It reflects your credit profile and is computed based upon your past credit behavior and usage pattern.
What is the benefit of having a strong credit score?
Having a strong credit score means easy accessibility to different credit forms like credit cards and loans. Among other advantages, one can get a pre-approved loan, higher credit limit, lower rate of interest on loans, longer repayment tenure, waiver on processing charges, flexible loan terms etc.
Is 730 a good credit in India?
A good credit score is anything that is 750 and above. Lenders might be willing to easily provide you with credit card or loan approval if your score is 750 and above.
What is a strong credit score?
A strong score in India is 750 and above. In India, lenders prefer granting loans and approving credit card applications of those with a good credit score of 750 and above.
Why is credit score very important?
A credit score tells financial institutions about the borrower’s credit history and behaviour. With the assistance of credit scores, lenders and banks can decide whether it is sensible to grant the loan to the borrower.
What are the four ways of forming credit?
Four ways to simply form credit involve repaying loans by the due date, timely repaying the credit card dues, avoiding applying for various credit forms frequently and keeping credit utilization below 30 percent.
How to increase CIBIL score fast?
A credit score might generally take some months to be improved or built. It is dependent upon the credit usage pattern, consistency of credit usage, credit behaviour and others. For your score to improve faster, ensure to check for any mistakes or errors in your credit report and timely report the same for instant correction.
