Credit score has become an important aspect of one’s financial life. A high credit score is a reflection of responsible credit behaviour. You must have heard that a good score makes life a lot easier. But how exactly does having an excellent credit score benefit us. Let’s find out.
Easy approval of loans
One of the most important parameters on which your loan application is evaluated is your credit rating. Whenever you apply for loan, lenders make an enquiry of your credit score. Most lending institutions have a minimum standard score below which they do not entertain any loan applications. A high credit score helps you cross this evaluation step and increases your chances of loan approval. With a shaky credit profile, you will always fear that your loan will be turned down.
If you want to check your car loan eligibility you must order your free credit report. Find out what your score is and whether it is above the minimum threshold set by your lending bank. If your score is above the minimum standard set by the bank, you can apply for the loan with confidence. A lower score may however result in outright rejection of loan application.
Lower rate of interest
The higher your score the greater will be the negotiation power that you have in hand. In case of personal loans and car loans your CIBIL score is taken into consideration while setting interest rates. With a high CIBIL score, you can bargain for lower interest rates. Since the banks will be willing to offer loans to a credit worthy individual, they may even waive off processing fee and other charges, if you negotiate with them. But with a low CIBIL score, banks will not budge with the loan terms. They will charge a higher rate of interest to cover up for the risk they are taking. Even 1% higher interest rate translates into thousands of rupees over the lifetime of the loan.
Lower insurance rates
Many insurance companies evaluate the risks associated with the customers before determining the premium rates. They use it for this purpose. A low credit score cannot be the reason for denying insurance coverage, but you are unlikely to get a reasonable deal if your score is less. People with a high credit score will be more likely to get good insurance rate premiums.
Best credit cards with high limits
People with good credit are considered trustworthy. Once you have proved that you pay back what you borrow on time, banks willingly approve higher credit card limits. This not only gives you a greater purchasing power, but it also helps in boosting the credit score further. A high limit helps keep the utilization ratio low, which is an important factor that constitutes your score. A good credit history also helps you qualify for the best credit cards in the market that offer several perks, reward points and cash backs and charge a low rate on balances.
These are just a few areas where an excellent score can benefit you. Your score can even affect the house that you take on rent. Landlords often check your credit profile to see if you have any history of delinquencies on payments. It can also affect your ability to get your dream job. Potential employers can check your credit history to gauge whether you have a stable financial life. A credit report that shows late payments, collection accounts and other such negative items will surely not create a good impression. Employers feel that financial troubles may keep you away from putting your best efforts in the job. A report free from such blemishes will instil confidence in the mind of the employer that you are in control of your finances. A financially responsible individual is considered dependable and trustworthy by employers.
Since good credit helps you in so many aspects of your life, you must order your free credit report and start working on boosting your score.
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