7 Benefits of a High CIBIL Score

What happens if your CIBIL score is high? What is the importance of CIBIL scores? If you are looking for answers to these questions, you’ve come to the right place.

A credit score is a 3-digit score assigned by any of the Credit bureaus — CIBIL, Experian, Equifax or CRIF High Mark, based on your past and present credit behavior. This can range anywhere between 300-900, with higher numbers indicating responsible credit behavior trends.

All lenders look at your CIBIL score before approving your loan application.

High CIBIL score is thus necessary to get a loan/credit card approval. But there are many more benefits associated with a high credit score. 

Here are 7 benefits of a credit score over 800 or just a high CIBIL score in general.

1. Lower Interest Rates on Loans

Lenders in the country have started pricing loans according to the risk profile of the applicants. And this has ensured that applicants with a high credit score get lower rates of interest which allow lower rates of interest for their home loans for those with a high credit score.

This is important because even half a percentage of increase in interest rates can impact your EMIs and subsequently, your finances. Therefore, one of the benefits of a 900 credit score or a high credit score is loans with low interest rates.

2. Quicker Approval on Loan/Credit Cards

A high CIBIL score is an indicator of your creditworthiness, and this allows your lender to make decisions regarding your credit applications at a faster pace. 

This is also helpful when you are in an emergency and need some quick funds and higher credit scores result in faster approval. Here are some tips on how to get your loan approved faster.

3. Better Negotiation Power with your Lenders

All lenders prefer lending to creditworthy customers who will pay back their loans promptly. If you are a customer with a high CIBIL score, you would make for a desirable borrower.

This might give you an edge over other customers and in the process, you could negotiate with the lender for a better interest rate or lower processing fee.

4. Improved Chances of Higher Limits on Loans

Higher loan amounts mean increased risk for the lenders. Hence, even if a loan is approved for an individual with a low credit score, the quantum of loan provided may be much smaller than what he/she applied for.

In other words, you could probably go in for a phone with better features or buy an SUV instead of a Sedan if you have a great credit score as you can avail a higher loan amount.

5. Easier to Get Higher Limits on your Credit Card

Higher limits on your credit card are generally decided based on your credit score and your income. With a high credit score, it is easier for your card issuer to increase your credit limit. 

This is because a high credit score indicates responsible credit behavior and therefore, decreases the risk factor for lenders.

6. Increased opportunities to get Pre-Approved Loans from Banks

A pre-approved loan from a bank is a great way of getting a quick personal loan from a bank. However, these loans are not offered to every customer. A lot of scrutiny in the form of a good credit score threshold and your account balances happen before releasing a pre-approved offer.

If you have a good credit score, then you might have a higher chance of getting a pre-approved loan from your bank or credit card.

7. More Chances of getting a Long Tenure Loan

A longer tenure on a loan makes your EMIs lower which is ideal for your monthly finances. 

However, from the lender’s perspective, a longer-tenure loan is riskier. But with a high CIBIL score you could get approval on longer tenures for your loans.

In Conclusion

The importance of high CIBIL scores is immense. In this article, we only spoke about 7 benefits and there are a lot more. Essentially, having a high CIBIL score makes your life easier, and provides better access to financial products and services. In case your credit score is on the lower side, do not worry. Here are some simple tips to improve your credit score.