‘You can survive with a bad credit score but a good credit score helps you save money.’
Why is Credit Score Important?
A credit score is a measure of your creditworthiness. It is a three-digit number in the range of 300-900 that forms an important part of your overall credit report. Credit score is used by lenders to check your solvency as a borrower. There are several credit bureaus in India which keep a track of your credit score based on your credit history, credit mix, payment history, length of credit accounts held, and credit inquiries.
For those who are unaware, a credit score of 750 and above is considered good for loan approvals. When you apply for any type of credit instrument be it a credit card, a personal or a home loan, the lenders fetch your detailed credit report and the first thing they consider is your credit score. Your credit score determines whether your loan application would get approved or rejected by the lenders.
Benefits of a Good Credit Score
Your credit score is a reflection of your credit health and tells a lot about your experience in handling credit. If your credit score is high, 750 and above, it goes on to show that you have been a responsible borrower and have been making your payments on time.
On the contrary, a lower credit score establishes you as a high-risk borrower and this may result in the lenders looking away while considering your application.
Here is a look at the advantages of having a good credit score:
- Makes You Eligible for Loans
Simply put, having a high credit score makes you eligible to great loan offers at low interest. A high credit score implies that you have been consistent with handling debts in the past and that puts you in the category of a low-risk borrower. Any lender would be willing to sanction a credit instrument if your credit score is 750+.
Interested? Here at Clix Capital, we offer a free credit score check. Hit the link to know your credit score and get a pre-qualified personal loan offer.
- Better Rate of Interest
Yet another benefit of a high credit score is that you can avail a better rate of interest on loans from lenders. This helps you save a considerable amount of money on EMIs.
Check your estimated EMI with our Personal Loan EMI Calculator.
- Faster Loan Approval
Apart from getting the best rate of interest, a high credit score also means you can avail exclusive, pre-qualified loans from lenders. This helps you save a considerable amount of time on loan approvals, especially when you need funds for a financial emergency. Your loan application will most likely be approved quickly cutting down on the waiting period.
- Higher Loan Limit
A high credit score also makes you eligible for a higher loan amount from lenders. As lenders look at your profile as favourable and low risk, they are willing to offer higher amounts. You can also avail a higher credit limit on credit cards and get access to the premium features and benefits.
- Future Preparedness
Even if you do not see yourself applying for credit now, it is important to maintain a good credit score and credit history. A good credit score will always come in handy when you apply for a loan in the future. A long credit history is considered a positive aspect in your credit application as lenders evaluate your credit handling.
Tips to Maintain a Good Credit Score:
- Pay all your credit bills and EMIs on or before the due date
- Never miss an EMI payment.
- Don’t default on loans and credit cards
- Keep Credit Utilization Ratio under 30% (don’t use more than 30% of the available credit limit)
- Maintain a balance of credit with secured and unsecured loans
- Check your credit score periodically (check your credit score here)
- Avoid making multiple credit or loan inquiries
To sum up, it is safe to say that a good credit score forms a crucial part of your overall credit health and acts as a catalyst while applying for a personal loan.
If you wish to apply for a personal loan, know your credit score