The score helps lenders determine how trustworthy the borrower is. It demonstrates the borrower’s capacity to repay the loan amount based on previous repayment history and patterns. CIBIL score is the most important and accurate metric to gauge the applicant’s creditworthiness. And, borrowers with high CIBIL scores avail attractive loan benefits.
Borrowers have to pay a small interest for taking out the loan. Based on the CIBIL score, each bank or lending institution charges different rates to the individuals. While higher CIBIL scores attract lower interest rates and minimal paperwork, lower scores incur the opposite. At times, applicants with lower scores might get rejected as well. So, a good score is pivotal for a personal loan.
The time it takes to get your loan approved and your CIBIL score are parallelly proportional. Therefore, higher scores lead to quick document processing and fast disbursement. Lower scores, on the contrary, incur strict scrutiny from the lenders.
- Higher Loan Limits with Longer Tenure:
Another advantage of having a high CIBIL score is that you can always negotiate for a higher loan amount. Since your high score speaks of your trustworthiness, lending agencies are often ready to offer high quantum amounts.
Additionally, individuals with a high score can avail loans with longer tenure.
The table below will give a better idea of a good and a bad credit score.
Credit score | Is it good or bad? | Chances of approval |
Less than 600 | Very bad | Extremely low |
600-649 | Bad | Low |
650-699 | Satisfactory | Possible |
700-749 | Good | High |
Over 750 | Very good | Extremely high |