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Your credit score reflects your financial habits and is a key factor determining how easily you can access credit. You should always remember – a high credit score can make your financial life smoother, cheaper, and way more convenient.
Maintaining a high credit score offers significant financial advantages when seeking a loan to make substantial purchases to meet immediate needs, such as buying electronics, home appliances, etc. or to achieve long-term goals like buying a house or financing your child’s education. Here’s how a good score works in your favour:
1. Increased Loan Approval Rates
Banks and lenders prefer applicants with high credit scores because they are seen as financially responsible. The risk of lending to such applicants is relatively low, and it increases their chances of loan or credit card approval.
It also reduces the likelihood of your application being rejected due to credit-related concerns.
2. Lower Interest Rates
A better credit score can fetch you the lowest interest rates on loans. Interest rates are directly connected to the risk of default. To reduce their risk, lenders look out for borrowers who have demonstrated responsible credit behaviour in the past and consequently possess a high credit score.
Lenders, therefore, offer the most attractive interest rates to applicants with high score. Over time, this translates into substantial savings on EMIs and total repayment.
3. Higher Credit Limits
When your credit score is high, credit card issuers tend to offer you a higher credit limit. This gives you better access to available credit and also helps maintain a low credit utilisation ratio against your credit cards. Both factors further help enhance your credit health.
4. Easier Access to Loans
A high credit score enables a lender to offer numerous loan options to an applicant. Some of the best loan options not available for people with a low score are also offered to applicants with a high score.
Your high score increases the lender’s trust, which translates into making the loan journey smoother. This is especially useful during emergencies or time-sensitive purchases.
5. Better Negotiation Power
A strong score gives you more control to negotiate favourable terms, like lower interest rates, waived processing fees, low/no foreclosure charges, or flexible repayment options.
Lenders are more willing to accommodate your preferences when your profile reflects low risk.
6. Higher Loan Amounts
Lenders feel more confident in sanctioning higher loan amounts to those with excellent credit histories. Your proven ability to manage larger credit responsibly boosts your eligibility. This can be crucial when applying for big-ticket loans, such as home loans, education loans, etc.
7. Pre-approved Loan and Credit Card Offers
You’re more likely to receive exclusive pre-approved offers from banks and NBFCs when you have a high credit score. These often come with minimal paperwork and quicker approval. You also save time and enjoy preferential interest rates or added benefits.
You can check your credit score for free at Paisabazaar, and if you have a high score, you would be able to see various pre-approved offers on your dashboard.
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In the end
A high credit score is a long-term financial asset. It improves access to credit, reduces borrowing costs, and gives you more leverage with lenders. By maintaining a disciplined credit behaviour, you can unlock better opportunities as it will enable you to have a high credit score.
