Taking loans from financial institutions has become a common phenomenon in the urban population. There may occur many situations in life where your current level of cash might fall short. These include medical emergencies, marriage in the family, or your child’s higher education.
A personal loan can come to your rescue at times of financial crisis. However, financial institutions gauge your creditworthiness by considering several factors before granting you a personal loan. CIBIL score is one such factor that can make or break your chance of being offered favorable terms on personal loans.
What is a CIBIL Score?
Your CIBIL score is a reflection of your credit history and repayment behavior. It is a 3 digit number ranging from 300 to 900 that denotes your creditworthiness and ability to repay the loan. A score between 750-900 is considered an excellent score.
Many factors are considered while calculating your CIBIL score. These include your payment history, types of credits, number of loans, outstanding loan amounts, etc. Although different financial institutions have other benchmarks for counting a good CIBIL score, a higher score lands on getting the loan approved.
Many people use the terms CIBIL score and credit score interchangeably. However, TransUnion CIBIL Limited is one of the many credit bureaus in India that measures the credit score of a potential borrower. CIBIL score is the most widely used, and many lenders refer to the CIBIL score to estimate your creditworthiness.
It is often witnessed that borrowers with lower CIBIL scores have difficulty getting their loans approved from prominent financial institutions. As a result, they may be charged higher interest or can even get rejected by lenders.
How Does a Good CIBIL Score Help You Get an Instant Personal Loan?
Your CIBIL score plays an integral role in your loan application. Here’s how and where your CIBIL score is used.
Rate of Your Creditworthiness
Your CIBIL score is one of the primary things checked by your lender while evaluating your credit profile. It gives them an idea of your creditworthiness and whether you can pay your EMI as per the loan schedule. A higher score instills confidence in the lenders, and they may shower you with excellent offers. On the other hand, a lower score denotes a red flag. While it’s not impossible to get a loan with a lower score, they often come with harsher terms and conditions.
Quick Approval of Loan Application
A high CIBIL score acts as a catalyst to expedite your loan application process. As a result, your loan application will take a minimum time to process. This will ensure quick disbursal funds to your accounts which you can use in emergencies.
If you have a good CIBIL score, you can apply to Fullerton India instant personal loans and get the loans sanctioned within minutes. The application process is completely online and comes with attractive interest rates. You can check your eligibility and avail the benefits of the offer today.
Competitive Interest Rate
Interest is a critical consideration while obtaining any loan. A high CIBIL score gives you the negotiation authority to lower your interest rates. You get to choose from a veritable list of lenders who offer you competitive personal loan interest rates. On the other hand, a lower score loses out on this privilege and keeps the lender in the dominant position.
Higher Loan Amounts
Not just the interest rates but CIBIL scores also influence your loan amount. A high score increases your chances of getting the upper limits of loans. The borrowing process is also hassle-free with minimum documentation.
Additional Benefits
Apart from financial institutes, the CIBIL score is used by other entities. For instance, many organizations perform credit checks before hiring a new candidate. The same goes for your landlord too. Even furniture rental companies check out your CIBIL scores. A good score ensures that you get better offers from all of the above entities.
How to Maintain a Good CIBIL Score?
Your CIBIL score dominates almost the entire financial aspect of your life. Hence you must pay attention to it. Here are a few tips to ensure a healthy score.
- Pay your EMIs regularly and avoid late payment.
- Always pay your EMIs and credit card bills in full. Paying the minimum amount due or a partial amount will cause a lot of interest to get accrued on the balance, thereby increasing your debt and lowering your credit score.
- Review your CIBIL report regularly for inaccuracies or misinformation.
- Do not exhaust the credit limit of your credit cards. Ensure that at no point, use more than 30% of your card limit.
- Avoid applying for multiple loans simultaneously. This indicates credit-hungry behaviour and can lead to rejection by lenders.
- Do not re-apply for loans that did not get approved within short intervals.
- Monitor your co-signed loans.
- Avail at least one credit product so that you have a credit history to show.
- If you have a stable income, but your CIBIL score is “NH” or “-1” since you don’t have any credit history, you can apply for a personal loan with a reputed NBFC whose eligibility criteria matches your profile, and repay the loan on time as per schedule to build your credit history.
In Conclusion
Life is unpredictable and one never knows when one would require outside financial assistance. Hence always endeavor to maintain your CIBIL score above 750 to quickly access loan products at cheaper rates whenever you need them.
