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.