Over the last few years, taking credit has become easier than before due to more private lenders and NBFCs coming up in India. You can apply for a loan and take credit to cover your financial goals for planned or unplanned expenses. Personal loans, business loans, and other credit types can give you quick access to funds for any of your purposes.
However, one thing that lenders will check while screening your loan application is your CIBIL score. When the lenders check the score of the applicants, they get assurance of the applicant’s creditworthiness and timely repayments. Ranging from 300 to 900, lenders look for a higher score to approve your loan application. Now that you have achieved a good credit score, find out what difference it can make in your loan eligibility.
What is CIBIL Score?
TransUnion CIBIL carries out your CIBIL score calculation based on your credit history, payment history, and other details mentioned in your CIBIL report. It is a 3-digit number ranging from 300 to 900. A high score is generally considered reasonable to avail credit. A good credit score indicates responsible credit behaviour in the past and a track record of timely repayments. Therefore, it helps in presenting you as a low-risk borrower.
Although credit score is not the only parameter for determining a borrower’s ability to avail a loan, it is one of the most important things that lenders check while evaluating loan applications. Having a poor or no credit score will make the lender susceptible to your repayment capacity.
How a Good CIBIL Score will Affect Your Loan Eligibility?
If you are looking forward to taking a loan to meet any of your expenses and have a high CIBIL score, the following are the key benefits you can get.
1. Increased Chances of Loan Approval
A good credit score indicates responsible behaviour towards your credit, a clean track record of repayments, and a lower default risk for the lender. As a result, the lender perceives you as a low-risk borrower, and your chances of getting loan approval increase. However, you need to fulfil other eligibility conditions and share the required documents to get your loan approval.
Also Read: Simple Ways to Increase Your Credit Score in India
2. Approval for a Higher Loan Amount
A high credit score also increases your chances of getting approved for a higher loan amount. For instance, Clix Capital offers personal loans of up to Rs. 10 lakhs. So, the higher the credit score, the higher the loan amount you can take with agreeable terms and conditions. It is because a high score is indicative of a lower default risk and regular repayment behaviour. As a result, the lender agrees to risk a higher amount for you.
3. Reduced Interest Rates
Lenders charge a lower interest rate from borrowers with a high CIBIL score. Therefore, a high credit score helps you save a lot on interest outgo and keeps your EMIs within budget.
4. More accessible Loan Terms and Conditions
Before a lender offers you a loan with a particular set of terms and conditions, the first thing they often look at is your credit score. A high CIBIL score is a typical indication of responsible credit behaviour and high creditworthiness. As a result, lenders are more convinced to grant you a loan with more favourable terms and conditions, such as discounted processing fees, lower pre-payment or late payment charges, and others.
5. Easier Access to Pre-Approved Loans
A high credit score also increases your chances of getting pre-approved loans more quickly. With such loans, you get faster access to credit when needed, as they require shorter approval times and minimal documentation needs.
6. Approval for a Longer Loan Tenure
A longer loan tenure usually means a higher risk for the lender. Therefore, the lenders often prefer borrowers who can pay a higher amount in EMIs and pay off their loans as quickly as possible. However, if you have a good credit score, they may perceive you as a low-risk borrower and may agree to risk their money for a longer period.
Clix Capital offers personal loans for up to 4 years. The higher the credit score you have, the longer loan tenure you may opt for. A longer loan tenure results in smaller EMIs that you can repay easily without overburdening your monthly budget.
Typically, individuals with a higher CIBIL score can get the above benefits to improve their loan eligibility. If you check CIBIL score and find that it is lower than the required limit these are a few practical tips to improve it and gain these benefits:
- Identify any errors in your CIBIL report and get them corrected as soon as possible.
- Diversify your credit profile with different secured, unsecured, long-term, and short-term loans
- Stay regular with your credit card bill and loan EMI payments
- Request an increase in your credit limit
- Don’t close your old accounts
- Retain your old credit cards, even if you do not use them anymore
- Avoid too many hard inquiries during a short period
So, by now, you must have understood how vital CIBIL score is for your creditworthiness and what difference it makes in your loan eligibility. Start working towards improving your score using the tips mentioned above and gain all the benefits you deserve. Once you achieve that, you can contact Clix Capital to avail Personal loans, Business loans, Healthcare Equipment Finance, Loans Against Property, and School Financing/ K-12 Loans as per your requirements.
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