Why Is It Important to Maintain A Good Credit Score?

Your credit score is calculated based on your credit history for the last 36 months. It also finds a place on your CIBIL report, which details and outlines your credit history. This score allows lenders to judge your credit standing and repayment capacity. Thus, before applying for a loan or credit card, read on to know why you need to have a good CIBIL score.

It Shows your Creditworthiness

When you apply for any form of credit, the lender you are applying with checks your CIBIL score to judge your credit standing. Your credit score is a calculation of your credit history, repayment tendencies, and your recent borrowing information. This report compiles all your data based on the information your lenders provide CIBIL. So stay on track with your repayments and never skip EMI deadlines. This way you will always have a worthy report and maintain a good credit score above 700. This, in turn, will signal the lender that you are creditworthy.

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It can help you get any form of credit

A good credit score will help you get funds in the form of a loan or via a credit card more easily. For instance, most lenders use your credit score to determine your eligibility for personal loan. This is because it is a collateral-free loan, and lenders want to be sure of your repayment capacities in advance. Based on your creditworthiness, lenders decide how much to lend you and thereby decide the terms on which to sanction you a loan.

It can help you get loans on a lower interest rate

A good CIBIL score is a sign that you are responsible with repayment. This means that you can get a loan with almost any lender at the lowest interest rates. For example, personal loan interest rates can be lower for someone with a credit score of 750 and above. Thus, having a good credit score gives you the power to negotiate with your lender for better interest rates. What’s more, as you have a wide variety of lender options to choose from you can select a Personal Loan of up to Rs.25 lakh with added benefits from a NBFCs. Here you can utilise the Flexi loan facility to pay interest only on the amount you use and choose to pay interest-only EMIs to reduce your overall EMIs by 45%. You can then repay the principal at the end of the tenor, and take care of all unpredictable expenses with ease.

Other advantages of a good CIBIL score include the following:

  • You can get quick approval on higher loan amounts
  • You can get home loans and car loan on lower interest rates
  • You can get credit cards at better offers and lower transaction fees
  • You can get exciting offers and additional benefits on unsecured loans
  • You can get flexible tenors for the loans you avail
  • You can get loans on comfortable repayment terms and affordable EMIs

In order to ensure a better CIBIL score, regularly check your credit report for misrepresentations. If you find any errors you can open a dispute regarding the same to get it changed immediately. More importantly, plan your repayment in advance by using an EMI calculator, which helps you choose your principal amount and tenor for more affordable EMIs. This way you will be able to make timely payments and increase your credit score.