A credit score often called cibil score is a three-digit numerical score based on analysing your credit files and measuring your creditworthiness. It can range between 300-900. TransUnion Cibil Limited is the Indian company that holds all your credit records. It is very important to have a good credit score to avail of any type of loan and even to avail of special offers.
Have you ever wondered how a financial institution or application gets to know in an instance that you were late to pay the EMI of some loan you took maybe years back? Or maybe you have been paying all your dues on time which made your credit score rise high and makes you eligible to avail special rates on any loan service. All of this is possible because of my Credit score. The centralised storeroom for all financial lending records or all individuals availing such facilities in our country. A credit score of 700 or above is generally considered a good score and a score of above 800 is considered excellent. But how does having a good credit score make a difference? Well, suppose you are planning to avail yourself of a Car Loan and your contact to any bank or financial lending institute the first thing they will do is not to check your documents or anything but to check your eligibility to avail the loan through your credit report. If your credit score is good according to the bank’s policies then you are eligible to avail of the loan and if you are having a low credit score the bank might reject your loan application. Also if you are having an excellent credit score you might be offered a loan at a lesser interest rate than others. This happens because you are having a credit score that is higher and you are not at a risk to default on your future payments to the bank so they provide you with a better interest rate to promote you to avail the loan from them.
Yes Bank for example has some of the most convenient and affordable interest rates to attract borrowers. They offer loans for two-wheeler, four-wheeler and pre-owned vehicles to customers with simple, quick and easy documentation with doorstep assistance to serve better. Also just like every other bank they too check your eligibility to avail of the loan by cross-checking your credit score. A good credit score is more likely to get you a better offer on loans. A good credit score is also a factor that could determine the tenure of your loan. In short, a good score means you are a reliable and timely due payer which are the qualities that are most desirable by banks. Paying your EMI’s on time contributes to the growth of your credit score and vice versa. Every EMI payment and defaults are recorded in the credit score calculation. If a person defaults too many times on his/her EMI’s the credit score department might blacklist the person from availing any loan from any lending institute to prevent further defaults and subsequently even after a few defaults if the person gets back on track and pay dues timely the credit score will start improving. Therefore, a credit score is very dynamic. Just by getting to know your credit score, you can interpret your credit availability. With a good credit score, one can also avail of special credit cards which are highly rewarding and come with many benefits and even your existing credit card limit can be increased in case of your credit score improving. Borrowers with a good credit score are also provided with a pre-approved loan offer. Generally, banks offer pre-approved loan to their existing customers which have a good credit history. Therefore to avail of all these exclusive offers and rewards having a good credit score is crucial.
Conclusion:
A credit score is one of the most important factors that determine your eligibility and offer of a loan from any financial lending institute. Having a good score is important to avail not just long term loans but also short term and personal loans too. A credit score is like a three-digit financial report card that can tell your past and present lending reports.
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