A high CIBIL score offers 7 key advantages to borrowers
Banks often prefer borrowers with high credit scores as they indicate a lower risk of default. Thus, having a high CIBIL score increases your chances of getting approved for loans, credit cards, and other forms of credit.
Thirty-five-year-old agriculture scientist Shruti Mishra boasts of a high credit score of 750. When she applied for a car loan two months ago, not only her case was approved in a couple of days but was offered loan at the least possible rate of interest which that bank could offer.
And this was not a one-off case. A few weeks ago, her credit card provider raised her credit limit from ₹5 lakh to ₹7.5 lakh for the same reason: a high credit score.
Anyone who has a high credit score would be able to relate to this. They are entitled to get faster loan approvals, lower rates of interest, even lower premium on their insurance and all in all, relatively better financial deal with the bank – more often than not.
Having a high CIBIL score, by default, offers a number of advantages.
These are the seven advantages of high credit score:
Loan approval: Lenders often prefer borrowers with high credit scores as they indicate a lower risk of default. Thus, having a high CIBIL score increases your chances of getting approved for loans, credit cards, and other forms of credit.
Bargaining power: With a high CIBIL score, you may have more negotiating power when it comes to loan terms, such as interest rates and repayment periods.
Higher credit limits: A high credit score indicates responsible credit behaviour, which may lead to lenders offering you higher credit limits on credit cards as well as loans. This can offer you with more financial flexibility and purchasing power.
Lower interest rates: Borrowers with high credit scores are seen as less risky by lenders, so they usually qualify for lower interest rates on loans as well as credit cards. Over aperiod of time, this can lead to significant savings on interest payments.
Faster approval process: Lenders often streamline the approval process for borrowers with high credit scores since they pose lower risk. This shows you may get approved for credit more faster, which can be beneficial in situations where you need prompt access to funds.
Better financial opportunities: A high CIBIL score can open up opportunities for various financial products and services that may not be available to individuals with lower scores. For instance, you may qualify for premium credit cards that offer exclusive rewards programs and benefits.
Insurance premiums: In some cases, insurance companies may consider your credit score when determining premiums for certain types of insurance, such as car insurance. A high credit score may lead to lower premium, thus saving you money over time.
Frequently Asked Questions:
Besides lower rates of interest, what other tangible financial benefit does high credit score provide to the borrowers?
A high credit score exhibits responsible credit behaviour, which may prompt lenders to offer higher credit limits on credit cards as well as loans.
What is the impact of high credit score on insurance policy holders?
A high credit score typically leads to lower insurance premiums.
Does a high CIBIL score offer better rental opportunities?
Landlords may also check your credit score when evaluating rental applications. A high CIBIL score can, therefore, raise your chances of securing rental housing, particularly in competitive rental markets.
What is the key disadvantage of a low credit score?
Among several disadvantages, one of the key disadvantages is that you are likely to be offered higher interest rates in case the loan is approved.
How often should you check your credit score?
Most experts recommend to check the credit score at least once a year.
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