The credit score of an individual is a key factor in determining the worth of his credit. The credit score for a potential borrower will be evaluated by a lender such as a Bank or a Non-Bank Financial Company( NBFC) to determine if the person should be given loan or not. The credit score also affects the amount of the loan approved as well as the interest rate on the borrower's loan. Furthermore, the lender may refuse the loan application if the applicant has a low loan value.
WHAT IS A CREDIT SCORE?
A credit score is a three-digit number reflecting an individual's creditworthiness. It usually ranges from 300 to 900, the maximum possible score being 900. When you apply for a loan, banks and different regulated banks verify your credit. TransUnion CIBIL, one of the four credit agencies that operate in India, prepares this score (others bureaus include Experian, CRIF High Mark and Equifax).
WHAT IS A GOOD CREDIT SCORE?
The closer your score to 900, the greater the chances that the application will be accepted, says Credit Information Firm, Tran Union CIBIL's website. A credit score of 750 and higher is usually considered a good score.
HOW DOES IT HELPS TO FULL FILL YOUR DREAMS?
It is necessary, therefore, to be aware of factors such as timely and full payment of the EMI's and the credit card dues that affect your credit score. If your score is poor, it may be due in large part to late or missed payments and a high level of credit usage. (The credit use ratio refers to the percentage of the cardholder's full credit card limit used.) A strong loan score ensures a lot of benefits over those with no loan score or lower score. If you have a good credit score, you have the following advantages:
Lower interest rates and better terms on credit products:
One of the advantages of a good credit score is that banks will give you credit cards and loans at a lower rate. Additional advantages can also be achieved, such as a discount on the premium and the eligibility to secure a higher loan.
Improve your chances for credit card and loan approval:
Creditors with an outstanding credit score are deemed a low risk and therefore there is a greater probability for credit cards and loans.
Access to the best rewarding credit cards:
You can also access the most rewarding credit cards on the market, including those that give the lowest rates and best rewards, such as cash, travel points and other advantages, with a good credit value.
Get approved for a higher credit limit on your credit card:
You will also get a higher credit limit on your credit card with a strong credit score. Because of your demonstrated loanability, creditors would probably lend you more money.
Eligible for a pre-approved loan offer:
Creditors with strong credit scores are also eligible for loan offers pre-approved. In general, banks provide the current customers with a strong credit background with an accepted loan bid.
Therefore, if you want to benefit from the above advantages, it is important to maintain a strong credit score
Therefore, it is necessary for all forms of credit, including personal loans, to have a good credit score. While a high credit score will help you secure loans at an attractive rate, you will ultimately take loans with a low credit score at higher interest rates. You can save money and advance on reaching your financial goals with competitive interest rates.