CIBIL score is a number that shows how likely you are to repay a loan. It contains your credit history from lenders, credit reporting agencies, and third parties. Lenders trust you to pay back loans with interest if you have a good CIBIL score. This means that you can get loans at reasonable interest rates. Let’s take a quick look at a CIBIL score and the benefits of having a good CIBIL score.
What is a CIBIL Score?
CIBIL scores are three-digit numbers between 300 and 900. It looks at how much you can afford to pay back. The best score you can get is between 750 and 900. If your CIBIL score is close to 900, you’ll have more access to various forms of financing. If your CIBIL score calculation is high, you are a good borrower.
A higher CIBIL score makes you more likely to get credit because you constantly pay your bills on time. So, the risk of the lender not getting paid goes down. Lenders look at their CIBIL score before giving someone credit. If a loaner has no credit history or a low credit score, the lender may be unable to figure out how risky giving the loan is. It may turn the application outright high-risk.
Top 10 Benefits of Having a Good CIBIL Score
- Low Interest Rates
Applicants with a good CIBIL score calculation can get better rates of interest. If your credit score is high, you can expect to pay less interest on big purchases and loans like a mortgage or a car loan. A good CIBIL score helps you to get loans with lower interest rates.
- Fast Approval
Everyone has financial needs. Today, loans may cover such demands. People with good credit might be able to get loans quickly. Every lender prefers a responsible borrower. If you have a good credit score, you may be able to get money quickly to pay for things you need. The money is deposited as soon as the lender agrees to the loan.
- Negotiating Power
Lenders like people who repay loans on time. People with good CIBIL scores have the edge over lousy credit histories. This might make it easier for you to talk to the lender and get a better interest rate than other people.
- Increased Credit Limit
Lenders set loan amounts and credit card limits on monthly income. CIBIL score calculation can also affect a person’s borrowing capacity. Lenders know they’ll get their money back when you have a good credit score. People with good payment histories and high CIBIL scores can get a bigger loan. Lenders may not want to give them more money if someone’s credit score is low. People with high credit scores can get a higher credit limit.
- Better Access to Pre-approved Offers
Getting a personal loan from a bank is a fast and easy option if you have already been approved for one. Not every person can get one of these loans. Before any pre-approved offers, you’ll have to maintain your CIBIL score and account balances. If you have a good credit score, your bank or credit card firm might give you a loan with good terms.
- Availing Premium Features on Your Credit Card
Your income and credit score play a role in determining your credit card limit. Lenders will also review your CIBIL score and report to figure out your eligibility. After that, they make decisions like on your credit card limit or offering you a rewards programme.
- Longer Loan Terms
With a longer loan period, you may be able to make lower monthly payments or EMIs. Longer loan terms may increase the lender’s risk. You can apply for more time to repay with a better CIBIL score calculation, lowering your monthly cost.
- Access to Balance Transfer Facility
The Balance Transfer Facility allows users to save the most on their loans. Using this tool, people can move their main debt to a lender with a lower interest rate. Before transferring loan balances, lenders check the CIBIL score calculation of people. Those with good credit can easily use the Balance Transfer option, but those with bad credit may have trouble.
- Simplified Rental Approval Process
Many landlords are using credit scores as part of the screening process. Your chances of getting a home are much lower if you have a low credit score. If you have good credit, finding a landlord willing to give you a chance to stay is much easier.
- Better Insurance Rates
Insurance firms look at your credit history to determine your insurance risk. Insurance premiums tend to be more expensive for those with lower credit scores. If you have a good CIBIL score, you will pay less for insurance than others for the same coverage.
How to Increase CIBIL Score?
Your CIBIL score is a good way to see your credit history. Your credit score is based on many things, like how well you’ve paid your bills in the past, what kinds of credit you have, how much you use credit, etc. Here are some tips on how to increase your CIBIL score:
- Keep a Good Track Record of Repayment
Pay off any loans or credit card balances you have on time and in full. Your CIBIL score can decrease if you miss payments or pay them late. Paying off debts on time over a long period shows that you are responsible with credit.
- Don’t Use Too Much of Your Credit
The credit usage ratio shows how much credit has been used. Keeping your credit usage ratio at 30% or less shows that you don’t depend too much on credit. If you keep this, your CIBIL score calculation will go up. You’ll have a better chance of getting loans and credit in the future.
- Do Not Apply for Loans from Many Places at Once
Don’t apply for and ask about loans from many different places at once. It shows that you depend only on credit. This increases the number of hard inquiries on your credit report. Both of these things hurt your CIBIL score calculation.
Getting a high CIBIL score is sometimes easy, but maintaining it is hard. It’s important to keep your mind on handling good credit habits by drawing awareness to those habits. This ensures you get rewarded for being careful with your credit. When you need the credit most, you can easily get it.
If your CIBIL score is poor, you may improve it with the help of credit experts at Piramal Finance. They will suggest what’s best for you and help take care of your credit woes. You can also visit the Piramal Finance website and help yourself to the knowledge of wide-ranging financial products and services, especially credit cards and personal loans.
Also Read: 10 Great Ways to Improve Your CIBIL Score