Top 8 Advantages of Having High CIBIL Score Value

Ever wondered what having a high CIBIL score could mean for your financial well-being? From faster loan approvals to better interest rates, the benefits of a high CIBIL score go far beyond just creditworthiness. A strong credit score is a key factor that lenders consider when evaluating your loan application. By understanding the CIBIL score benefits, you can make borrowing more affordable. In this blog, we will explore the top high CIBIL score benefits you should know and why maintaining a good credit score is more important than ever. Read on!

What is a 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

What is a good CIBIL Score?
A CIBIL score above 750 is generally considered good. It indicates strong creditworthiness and improves your chances of getting loans at better terms.

Why is a PAN card required to check the CIBIL score?
Your PAN card uniquely identifies your credit history across NBFCs and banks. It ensures accurate tracking of your CIBIL score linked to your financial records.

What are the 3 best credit scores?
India uses multiple credit bureaus. The most recognised are:
•    CIBIL Score (by TransUnion CIBIL)
•    Equifax Credit Score
•    Experian Credit Score

How to maintain a good CIBIL score?
•    Pay bills on time
•    Keep credit utilisation low
•    Avoid frequent loan applications
•    Maintain a healthy credit mix

Can you get a lower interest rate with a high credit score?
Yes, a high CIBIL score can help you negotiate lower interest rates on loans, saving you money over time.

What is a CIBIL score, and why is it important?    
A CIBIL score is a 3-digit number (300-900) that reflects your creditworthiness. Lenders use it to assess your repayment behaviour before approving loans.

How long does it take to improve a bad CIBIL Score?
It can take anywhere from 6 months to 1 year or more, depending on your efforts, like clearing outstanding dues and maintaining timely payments.

Is it possible to have a high CIBIL Score but still be rejected for a loan?
Yes. Despite a high score, you may be rejected due to low income. Unstable employment, high debt-to-income ratio, or insufficient documentation.

How does missing an EMI payment affect my CIBIL Score?
Missing even a single EMI can negatively impact your score. Repeated delays or defaults can lead to a steep drop and reduce approval chances.