Common Benefits of a High CIBIL Score

Banks and NBFCs provide data to credit bureaus on a regular basis to calculate the credit score representing the creditworthiness for availing credit like loans or credit cards. Credit Score of 750 and above is generally considered as a high score for availing credit by all the four credit bureaus i.e. CIBIL,  Experian, CRIF Highmark, and Equifax. A high credit score indicates responsible credit behaviour of the applicant. Read on to know the benefits of a high credit score.

Benefits of a High Credit Score

While your credit score is not the only thing that a lender considers when evaluating your loan or credit card application, the following are some key benefits commonly associated with a high score:

1. Higher Chances of Approval: A high credit score indicates responsible credit behaviour, a clean repayment track record, and a lower risk of default for the lender which typically increases your chances of being approved for a loan or a credit card.

2. Lower Interest Rates: If you have a high credit score, lenders will provide you with a comparatively lower rate of interest for availing credit like a personal loan, home loan, or credit card.

3. Increased Access to Pre-approved Loans: A high credit score may also often increase your chances of accessing pre-approved loan and credit card offers when you check your credit score on Paisabazaar.com. These offers can give you quicker access to credit as they usually involve minimal documentation and shorter approval times.

4. Easier Access to Premium Credit Cards: Before approving a credit card application, one of the first things that lenders consider is the credit score of the applicant. As a result, credit card companies are more inclined to provide such applicants access to premium credit cards that feature better rewards in the form of reward points, cashback, privileged services, etc.

5. Approval for Higher Loan Amount/ Credit Card Limit: A high credit score can also increase your chances of being approved for higher limits on your loans and credit cards. This is because a higher score usually indicates a lower risk of default owing to your responsible credit behaviour.

6.Possibility of Approval for Longer Tenure Loans: A longer tenure usually involves a higher degree of risk for the lender. However, a high credit score may help you avail longer repayment tenure on your loan than those with a lower score. When a loan is repaid over a long period of time, it results in smaller EMIs, lower monthly credit burden and may help you manage your monthly expenses in a better way.

Also Read: How to download your credit report online?

Ways to Improve your Credit Score

Your credit score is a numerical summary of your credit report. There are several factors that impact your credit score including your repayment history, credit mix, credit utilization ratio, age of credit history, etc. Following are a way that can help your improve your credit score: 

1. Maintain Clean Repayment Track Record: Pay your credit card dues and loan EMIs in full and on time. Late payments and missed payments can adversely affect your score. Ensuring timely repayment of debts over a longer period positively impacts your credit score as it indicates responsible credit behaviour over time.

2.Maintain a Low Credit Utilisation Ratio: Credit utilisation ratio is the ratio of credit used to the total available credit limit. It indicates the extent of your dependence on credit. Maintaining a low credit utilisation ratio of 30% or lower indicates lower dependence on credit and a lower repayment burden and thus higher creditworthiness.  This in turn positively impacts your credit score and increases your chances of securing additional credit.

3.Regularly Checking your Credit Report for Errors: Regularly check your credit report for administrative errors. These must be reported and rectified in a timely manner using the prescribed dispute resolution procedure. This may help you increase your credit score.

4.Avoid Multiple Simultaneous Loan Inquiries/Applications: Avoid making multiple loan applications and inquiries with several lenders at the same time. It reflects you as credit hungry and also increases the number of hard inquiries on your credit report which adversely affects your score.

5.Increase in Credit Limit: Requesting credit card providers to increase the credit limit on your card may have a positive impact on your credit score. A higher credit limit can help you decrease the credit utilization ratio as the available credit limit increases as long as the usage remains at the same level. You can contact the provider or check for the option of increasing the credit limit through net banking or phone banking.

6.Avoid Settling Your Debts: You should always try and pay off your debts in full and opt for a settlement only as a last resort. Though settling your debt may reduce the burden of debt, it indicates an inability to repay your debts and may thereby negatively impact your credit score and chances of credit approval in future.

Conclusion: You can build and maintain a high credit score over a period of time. All you need to do is stay focused on maintaining good credit behavior to be eligible for credit as it will not just help you avail credit, but will also help you get rewarded for your credit-conscious behavior in the form of various pre-approved loan offers, etc.

In case you have a low score, you can opt for credit advisory services by credit experts from Paisabazaar and rebuild your credit score to increase your creditworthiness in future.