High CIBIL Score for Loan

Top 8 Advantages of Having
High CIBIL Score Value

April 15, 2022 • 17928 views

Ever wondered what having a high CIBIL score could mean for your financial well-being? CIBIL score holds immense power in determining your loan eligibility. But what should you aim for a good CIBIL score? Let’s dive into the 8 key benefits of having a high CIBIL score and the factors affecting it. Read on!

Good CIBIL Score Range

A good CIBIL score usually ranges between 750-900. While a CIBIL score ranging between 700 and 750 increases your chances of loan approval, an excellent score of 900 ensures seamless loan approval.  

8 Advantages of Having a Good CIBIL Score

The advantages of a high credit score are:

1.    Loans With Lower Interest Rates: Applicants with higher credit scores can access loans with lower interest rates. It signifies your ability for timely repayments without defaulting on your loans. 
2.    Flexible Repayment Tenure: A good CIBIL score allows flexible repayment tenure. Moreover, with a long tenure, you can make successful repayments within the allotted schedule.
3.    Increased Chances of Credit Approval: A good CIBIL score of 750 and above increases your chances of loan approval. You can get the best terms and a seamless loan application process with simple paperwork. 
4.    Better Chances to Access Pre-approved Loans: One of the many benefits of a good credit score is improved eligibility for pre-approved loans and credit cards. Moreover, with a pre-approved loan offer, you do not need to go through extensive paperwork. 
5.    Higher Credit Limit: With an excellent credit score, you can get a higher credit limit. A higher credit limit signifies a lower credit utilisation ratio, which is an essential factor to improve your overall creditworthiness. 
6.    Increased Negotiating Power: With a high CIBIL score, your negotiating power increases. You can negotiate loan terms that best suit your financial needs. You can also ask for a higher sanction amount from your lender.
7.    Seamless Access to Premium Credit Cards: A significant advantage of a high credit score is that you can access premium credit cards from top credit card companies. 
8.    Increased Credit Card Limit: Achieving a high credit score raises your credit card limit because it reflects your responsible credit behaviour and timely bill repayment. On the other hand, it allows lenders to perceive lower lending risks, making you eligible for loans at lower interest rates. 

Factors Affecting Your CIBIL Score

Factors that affect your CIBIL score are:

1.    Inconsistent Credit Behaviour: If you fail to pay your monthly instalments on time, your credit score is negatively impacted.
2.    Not Paying Outstanding Debt: Accumulation of outstanding debts can significantly impact your credit score. Before applying for another credit product, make sure you clear your outstanding debt.
3.    Applying for Multiple Loans: When you apply for a loan, it initiates a hard enquiry on your credit report by lenders. Multiple applications of credit lines can potentially reduce your credit score. Hence, it is advised to only apply for one loan at a time.
4.    Paying Only the Minimum Amount Due: If you only pay the minimum amount due, it leads you to a debt trap, leading to increased compound interest. This reflects poor payment behaviour and may have an impact on your CIBIL score.

5 Ways to Improve Your CIBIL Score

Here’s how you can improve your CIBIL score:

1.    Timely EMI Payments
One crucial factor in improving your credit score is not defaulting on your loans or skipping EMIs. So, choose a loan type that offers flexibility in repayment tenure. This will help you to meet your personal or business obligations without experiencing the burden of debts. 

2.    Restrict Your Credit Utilisation
Restricting your credit use against the allotted limit can help improve your credit score over time. It is advisable to limit your credit utilisation to 30-40% of your total credit limit. Reaching the credit limit can negatively impact your credit score. 

3.    Monitor Your CIBIL Report Regularly
Monitoring your CIBIL report regularly can help you improve your credit score gradually. To avoid inaccuracies, make sure to check your CIBIL report regularly and correct the errors by submitting a CIBIL dispute resolution online. 

ALSO READ :- What Is A Good CIBIL Score Value In India?

4.    Avoid Applying for Too Many Loans
Lenders may mark you as a risky applicant if you apply for too many loans at the same time. This signifies that you have poor credit management ability. It is recommended to apply for one loan at a time and make successful repayments to boost your credit score. 

5.    Maintain a Healthy Credit Mix
Lenders may feel discouraged to provide the financing if you do not have a good credit history. Maintaining a healthy credit mix of secured and unsecured loan, with short and long repayment tenure, can help demonstrate your capability to manage a diverse range of credit lines. This can also help you to access better loan terms. 

To Conclude 

A good CIBIL score provides various advantages, from instant loan approval to flexible payment tenure and loan terms. It demonstrates responsible behaviour and lenders prefer individuals with a good CIBIL score. With so many benefits of having a high CIBIL score, it is imperative to improve your CIBIL score by improving your financial behaviour. For sure your credit score will improve and help you get loans in favourable terms. 

Frequently Asked Questions

1.    What is a good credit score in India?
750-900 is considered a good credit score range in India. 

2.    Is 750 a good CIBIL score?
Yes. A credit score above 700 is considered ideal. Moreover, if you have a credit score of 750 or above, it is considered excellent.

3.    How long will it take to increase my CIBIL score from 600 to 750?
While your CIBIL score may not increase overnight, following certain strategies religiously can help. Try to make timely EMI payments, do not apply for multiple loans at once, and rectify errors in your credit report if any. This will help you increase your credit score over time.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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