A good CIBIL score is considered to be 700 and beyond. If your CIBIL score is higher, there’s a better chance of getting swift acceptance for your loan along with plenty of amazing deals. This score determines your financial health as well as your creditworthiness.
Lenders avowedly believe that if the borrower has a higher CIBIL score, they own the liability to repay them without missing on time. Additionally, this category of borrowers are regarded as less credit-risk customers.
Four reasons why CIBIL score is important
Now why lenders consider CIBIL score as one of the prime factors for loan approval? You’ll get the answer once you know the reasons for its importance in the financial space.
Also Read | Shares or mutual funds, which is a better option for you?
To know the creditworthiness:
Generally, a person’s credit status can be known by looking at their past credit reports. Lenders believe that a good CIBIL score proves that the customer will pay the debt timely. If you have a good credit history, the lender accepts your loan application in no time, and vice-versa.
To check your loan eligibility:
The ideal CIBIL score lenders consider for a loan approval is 750 and above. Hence, it’s pivotal to maintain the benchmark to avail loans upfront as per your request. If you don’t have any past credit history, it would be arduous for the lenders to come to a decision with respect to your loan eligibility.
Tenure of the loan:
Some borrowers require a longer tenure to repay the amount but not everyone gets accepted for this option. But the good news is if your CIBIL score is high, you can get the desired tenure on your loan. This not only aids borrowers to meet repayment deadlines but also propels them to apply for loans again in the future, if required.
Loans at low interest rates:
Who doesn’t want a loan at a low interest rate? But not everyone is eligible to avail this window of opportunity. A good CIBIL score can land you the chance to get a loan at a low interest rate. It motivates the borrower to come back to the same lender for a loan again down the line. This is a win-win situation for both.
Lending institutions check CIBIL score to assess the lender potentiality. So, before you apply for any loan, always ensure that your CIBIL score 750 and above.
The best way to keep this score above the benchmark is by paying your debts on time and creating a decent credit history.
If you have a good credit track record, your CIBIL score will obviously improve over the period. Lastly, don’t forget to keep tabs on your credit report every so often.