Loans and credit are an integral part of the modern-day lifestyle. Whether you want to buy a home or foray into the entrepreneurial world, you will need access to credit and credit easily comes only to those who have an excellent credit score. In fact, a good credit score does not only enhance one’s accessibility to credit on beneficial terms and conditions but also makes one eligible for other benefits, such as lower mortgage insurance premiums, a higher probability of being able to rent out one’s dream apartments or homes, increased opportunities within the employment sector, etc.
This article aims to apprise its readers about the many benefits of a good credit score and incite them to take the steps necessary to maintain a good credit score.
Importance of a Good Credit Score
A Good Credit Score Gives One Easy Accessibility to Credit
Individuals with good credit scores are people who can be trusted with timely repayment of loan EMIs. People with a clean repayment history and a demonstrated ability to handle debt with responsibility have good CIBIL score. Thus, lenders don’t see much risk in lending money to such borrowers. In fact, lenders are always on the lookout for credit applicants with good credit scores. Thus, when an individual whose credit score falls within the excellent or good category applies for a loan, approval comes easily and quickly.
It Also Makes One Eligible for Lower Interest Rates
When it comes to long-tenor loans, such as home loans, applicants must strive their best to avail themselves of the lowest interest rate possible. A low interest rate directly translates into affordable loan EMIs. It also helps one keep their interest outgo on the loan to a minimum. A good CIBIL score increases a loan applicant’s negotiating power and ability to ask for low home loan interest rate.
It Also Makes One Eligible for Overall Better Loan Terms and Conditions
As previously mentioned, a good CIBIL score enhances an individual’s negotiating power. Thus, when such individuals apply for a loan, lenders are more willing to sanction them a loan on terms and conditions that will work best for them. In other words, such individuals can easily ask for a higher loan sanction and a longer or shorter repayment term, based on their comfort.
Individuals with a Good CIBIL Score Can Also Ask for a Higher Credit Utilization Ratio
The credit utilization ratio is the ratio of the total credit they are using to the total credit available to a borrower. Individuals with a good CIBIL score can also get their credit utilization ratio upgraded easily. In other words, they can easily convince credit card companies to increase the amount of credit available to them.
A Good Credit Score Increases One’s Chances of Landing their Dream Job
These days, the majority of employers check an individual’s credit score before extending to them their final job offer. An individual’s credit score tells people how responsible they are and the attitude they have towards credit and responsibilities in general. A bad credit score gives employers a bad impression and raises questions regarding the individual’s ability to handle responsibilities. Thus, sometimes, even after an individual has qualified all the rounds, a bad credit score can easily become the reason behind them not landing their dream job.
The same logic applies to renters and lessors. Landlords also often check renters’ credit scores and therefore, a bad credit score can easily come in the way of individuals landing their dream apartment.
Final Words
In conclusion, every credit user must try their best to improve cibil score. The ideal CIBIL score for home loans or any other type of loan in India is 750 or above. Maintaining such a credit score is easy. Be punctual with EMI payments. Never miss a due date and if you think, you will not be able to meet your EMI obligation during a specific month, inform your lender in advance. Do not be excessively dependent on credit; credit card companies and commercial lenders consider this as a red flag. Apply for credit only when you need it and use your credit cards cautiously. More importantly, try and clear your credit card dues at the end of each month. Also, maintain a healthy mix of both secured and unsecured loans and the age of your credit history. Doing these simple things will help you maintain a good CIBIL score and make you eligible for all the benefits mentioned above.
