Why you need to maintain a good credit score (CIBIL)?
15 March, 2019
People know that they need a good credit score, but why? Why do you need a good credit score? And what does it even mean?
Well, to start with, a credit score or CIBIL score is a 3-digit number calculated based on the information provided by various financial institutions. Your credit history, repayment history, outstanding loans, and a few other factors determine your repayment ability, and that’s what your credit score reflects.
A credit score ranges from 300 to 900 and higher the score, the better is your financial reputation. And, what benefits do a high credit score brings? Well, here I put 6 for you –
1) It gets your loan approved easily
A good credit score doesn’t guarantee approval of loans, but it’s the first thing that the lender checks. When you apply, the lender fetches your credit score and only when it’s good, the other factors are taken into consideration.
But when your credit score is low, the lender, whether banks or NBFCs, can turn down your loan application. Even if they don’t turn it down, they would be hesitant to process the application without you breaking some sweat.
So, with a good CIBIL score, also comes the confidence to apply for a loan.
2) It can get you loans at lower interest rates
Not only does a good credit score helps you get easy personal loans but also, provides you with the power to negotiate. High interest rates can cost you a fortune when you’re trying to clear off the debts, and the personal loan interest rates are affected by your credit score.
With a good credit score, you can qualify for low interest rate personal loans and also, can negotiate and lower other charges. You can even have your prepayment charges, or processing fees waived off; a good credit score is that powerful.
Additional Read – 11 things you should know about Credit Score
3) It could improve your chances to get hired
The credit score also reflects your trustworthiness in a way. So, employers too, at times, like to check credit reports. It’s not the same as the one sent to the lenders; still, a series of late payments can have a bad impression on the prospective employers.
Also, piled high liabilities might reflect you as being irresponsible. So, take good care of your credit score.
4) It could help you get rented houses easily
Even the landlords like to know the credibility of the future tenants. A good credit score portrays you as someone who is financially responsible. It strengthens the landlords believe in you that you will pay the rent on time.
Late payments and outstanding balances, on the other hand, damages your credibility and makes it difficult for you to secure a good apartment.
5) It can bring more rewards with your credit card
Paying your dues on time increases your credit score, which in turn gives you more rewards from your credit card or makes you eligible for a better card. From cashbacks to airline miles, these rewards come in various forms.
You can even earn and redeem points while shopping or gain points for just signing up for a card. Then, there also is Cred, which gives you rewards for paying credit card bills on time. But all these would be possible only if you have an excellent credit score. Cred, for example, is only available to those who have a credit score higher than 750.
6) With a high credit score, comes higher credit limits
When you pay your dues in full and on time, you increase the value of your goodwill. Also, not utilising most of the credit limit adds up to your benefit by increasing your credit score. It even encourages your credit card company to give you more offers, cashbacks and loyalty points as mentioned above.
But there’s more. With timely bill payments, your credit limit keeps going higher.
Additional Read – 6 Things you can do to improve your Credit Score,
Monexo can help you with it, to help build the credit you deserve. Monexo helps you get personal loans online and thus, gives you an opportunity to strengthen your credit score. Instead of relying on the CIBIL score, Monexo has its own approval system to get you your first personal loan.
If you’re looking for an instant personal loan, apply at Monexo- P2P lending and enjoy hassle free borrowing.