6 Key Benefits of Maintaining a Good CIBIL Score

A CIBIL score is a numeric representation of your credit report, and it is based on numerous factors such as:

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• Credit mix 
• Debt-to-income ratio 
• Credit utilisation ratio 
• Repayment history 

As such, if your CIBIL score range lies between 750 and above, it is considered an excellent score. Lenders give importance to your CIBIL score range since it demonstrates your financial standing, your creditworthiness as well as your experience with credit.

Top 6 Benefits of Maintaining a High CIBIL Score

1. Lucrative Credit Interest Rates

A high CIBIL score can provide various benefits, and one such benefit is that you get to enjoy low interest rates on your credit. A good credit score has a positive impact on the lender, and they perceive you as a responsible borrower.

This further boosts the confidence of banks and NBFCs, and they are likely to offer you loans at lower interest rates owing to the reduced risk. This is simply because the likelihood of repayment from your end is high, and the chances of defaulting on the loan are low.

When you avail credit at lower interest rates, your monthly instalments also decrease. Paying a lower interest throughout your loan tenure means your overall borrowing costs also decrease considerably. This helps you to save your money in the long run.

Furthermore, you can utilise these funds to make an additional EMI payment or to explore prepayment options whenever your finances allow. This helps you to pay off your loan much earlier than the stipulated timeline.

2. Increased Likelihood of Credit Approval

When your CIBIL score range is inclined towards the higher end, the likelihood of loan approval increases significantly. This is because a healthy credit score implies creditworthiness, and lenders consider you as an individual with adequate control over your finances.

Financial institutions perceive you as a low-risk credit borrower with minimal chances of delaying the monthly instalment payment or defaulting on the loan. So, lenders approve your loan quickly.

Along with quick credit approval, you get several other benefits related to your loan, which include:

• Lucrative interest rates 
• Flexible repayment options 
• Better terms 

These additional benefits help you in tweaking the loan terms and conditions according to your finances and affordability. Thus, having a higher CIBIL score can aid in getting hassle-free approval from the lender.

3. Pre-Approved Loan Offers and Other Benefits

A higher CIBIL score also brings along the benefits of getting a pre-approved loan offer and an array of other attractive perks. With a high credit score, banks and NBFCs can even offer you a pre-approved loan, coupled with numerous advantages.

When availing a pre-approved loan, you do not have to start your loan processing formalities from scratch. This is because of your existing relationship with the lender. In most cases, lenders will likely have your information on file, and will offer you credit accordingly.

Hence with minimal paperwork, you enjoy near-instant disbursal of funds. Apart from this, you also get competitive loan interest rates and loan repayment terms.

A good CIBIL score range may also provide you with other rewards and offers, specifically for credit cards. These include lower fees and charges, travel rewards, cashback points, discounts and much more. Thus, having a good credit score always opens a gateway of benefits for you.

4. Enhanced Negotiation Power

With a higher CIBIL score, you get enhanced negotiation power that you can leverage to avail the loan on favourable terms. A good credit score denotes a positive repayment history, lower chances of default and late payments, as well as your sound expertise in credit management.

With lenders seeing you as a trustworthy borrower, you can negotiate to request lower interest rates, lower fees and charges, favourable loan terms and much more. You can use your negotiating power for various kinds of credit, such as an automobile loan, a home loan, or even a personal loan.

5. Higher Credit Limit

As a responsible applicant, lenders are more likely to offer you a higher sanction, without any hassles.

You may even get a higher limit on your credit cards, and such perks are quite exclusive. You can get additional funds to cover your financial requirements with a higher loan limit. In addition, you can use these funds for personal usage, addressing medical emergencies, or even travel.

6. Credit for a Longer Tenure

Another advantage of a higher CIBIL score is that you can avail loans with a longer repayment tenure. A good credit score ascertains that you are a responsible and safe borrower, and the chances of missing EMI payments or defaulting on your loan are minimal.

This is why lenders do not shy away from offering you the option to choose a longer tenure on your credit. With a longer loan tenure, your principal amount gets divided across the loan duration. This makes your EMI payments smaller and easier to afford.

A lower EMI can help you prioritise other pressing financial obligations, while also repaying your debt on time. Hence, having an optimal credit score can help you in getting a longer repayment tenure that makes the whole loan repayment process more streamlined.

Now that you know the importance of having a higher CIBIL score, make the effort to enhance your credit score. When working towards this goal, a regular credit score check is key to tracking and monitoring the progress of your credit score.

Disclaimer : The above is a sponsored article and the views expressed are those of the sponsor/author and do not represent the stand and views of The Tribune editorial in any manner.