Your ability to obtain a loan is influenced by a number of factors. The most important factor is your CIBIL™ score which, coupled with the information on your credit report, will determine if you are eligible for a loan and what interest rate is to be offered.
The primary function of CIBIL™ is to compile and maintain records of individual and company loan and credit card payments. It’s a database that keeps track of business and individual client credit histories. Banks and other lenders provide these records to the credit bureau on a regular basis; using this information, a CIBIL™ score and Credit Report for each individual is generated, allowing lenders to assess and approve loan applications.
The CIBIL™ Score is critical during the loan application procedure. The lender checks the applicant’s CIBIL™ Score and Report once the applicant completes the application form and submits it to the lender. If the CIBIL™ score is low, the lender may reject the application without further consideration. If the applicant’s CIBIL Score is high, the lender may explore the application and consider additional aspects before deciding whether or not the applicant is creditworthy. The CIBIL™ Score serves as the lender’s first impression; the higher the score, the more likely the loan will be reviewed and accepted.
What Are The Benefits Of Having A Good CIBIL Score?
Lower Interest Rates: The interest rate on a loan is a huge deal. On loans and credit cards, everyone strives for the lowest possible interest rate. In the eyes of the lenders, interest is a benefit for giving you the loan and taking a gamble on it. A strong credit score indicates that a person has previously handled credit responsibly and will likely continue to do so in the future. As a result, lenders prefer to lend to those with strong credit scores at a lower interest rate than those with negative credit scores.
Better Loan and Credit Card Approval Chances: The true value of credit is realized when it is approved when it is most required. While certain loans, such as home and auto loans, are secured by the underlying asset, others, such as personal loans and credit cards, are not. As a result, before approving the credit, the lender would like to be extra sure of timely repayment. As a result, someone with a strong credit score has a better chance of obtaining loans and credit cards approved faster.
Increased Negotiating Power: Lenders want to lend to those who have a strong credit score. As a result, a person with a good credit score receives better offers for the things he needs. As a result, they have a stronger position to negotiate advantageous conditions with the lender. A person with a low credit score, on the other hand, will find it difficult to find a lender who will ease the loan terms.
Increased Chances of Obtaining Higher Credit Limits: The prospect of obtaining a higher credit limit would allow borrowers to obtain a larger loan, allowing them to possess larger assets (a higher-priced home with better amenities, an SUV instead of a sedan, etc.) This is only possible if the borrower has a strong credit rating. No lender in the market wants to offer larger amounts to clients who have bad credit.
Having a better CIBIL Score has numerous benefits. It could save you money on extra interest, speed up approvals, increase your chances of getting approval on larger amounts of loans, and give you greater negotiating power with lenders.
You can always take the necessary steps to improve your credit score. Remember to check your credit score here before you start your journey towards achieving a stellar credit score.