Your credit score is an indicator of your creditworthiness. The 3 digit number or score that the 4 credit bureaus generate like the CIBIL™ score is one of the important factors based on which lenders assess whether you can repay your credit card bills or loans on time. Having a low score can help you get a loan but you may not get favorable terms or a low interest rate. Let us now read on to find out about the four ways in which your credit score helps you secure a low-interest loan.
Better Chances For All Forms Of Credit
When you apply for a loan or credit card, lenders first look at your credit score. When the credit score is not good, lenders may reject your application or even if they approve, you will not get a good interest rate. Generally, a CIBIL™ score of 750 is very good and gives instant access to all forms of credit. Loan and credit card approval becomes easier and quicker with a good credit score. Thus, when you have a good credit score, you can apply for a loan or credit card with confidence.
Gives You Access To Exclusive Offers
A good credit score gives you access to the following exclusive offers:
- Lenders provide pre-approved loan and credit card offers to people with a good credit score.
- Lenders provide exclusive personal loan offers to people according to their credit score and profile. The chances of getting such offers are higher when the credit score is good.
- Lenders offer credit with low-interest rates and high credit amounts.
Gives You Higher Negotiating Power
A good credit score gives you higher feasibility to negotiate for a low interest rate on a loan or credit card. If you have a good credit score, you will receive attractive offers from various lending institutions, and you can bargain for the best. You can even get a waiver for some administrative charges. But, if you have a low credit score, lenders will not be ready to give you favourable terms on your loan or credit card. Ideally, a credit score of 750 and above gives you a high negotiating power.
You Will Get Approved For Loan Amounts With Higher Limits
Banks and other lending institutions let you borrow higher loan amounts if you have a good credit score. Personal loans come with maximum loan amounts, but you may always not be eligible for the highest amount. This may be due to a bad credit score, low income, and so on. But, if you have a good credit score, you will qualify for a large sanction. On the other hand, if you have a low credit score, you will not be eligible for a larger loan amount approval. So, if you need a big loan amount, start building your credit score and make sure that it is excellent provided. If it is bad, take steps to improve the credit score if it is bad.
Your credit score is a critical factor in ensuring that you have a smooth financial life. It not only simplifies your access to credit but also gives you other benefits like better car insurance rates, easier approval for rental houses and apartments, a good reputation, and so on. It will make you better prepared for your financial future. Also, having a good credit score gives you something to be proud of. If you have taken your credit score from bad to good, then you can be proud of the hard work that you have put in.
Else, if you are maintaining your credit score, then you can be proud of the consistency. Considering the vitality of the credit score, you should be aware of how to check it, how to maintain it, and its benefits. Your credit score plays a crucial role in other financial dealings too. For example, your credit score plays a vital role in determining your eligibility for a home loan. Additionally, it comes under scrutiny for visa applications to countries like the United Kingdom or the USA.
FAQS Four Ways In Which A Credit Score Helps You Secure A Low-Interest Loan
1:What measures can I take to improve my credit score?
You can take the following measures to improve your credit score.
- Pay your bills on time
- Monitor your credit report regularly for accuracy
- Keep credit card balances low
- Manage your credit cards judiciously even if you use multiple cards.
- Don’t put multiple credit applications
2:How is a credit score determined and why is it crucial to have a good credit score?
A credit score is a 3 digit number generated by the 4 credit bureaus. It is determined based on your repayment history, loan defaults, number of open accounts, credit history, the total level of debt, and so on. It is essential to have a good credit score In order to qualify for low-interest loans and credit cards, to get easy approval of loans and credit cards, to get better car insurance rates, to get a higher loan amount sanction, to obtain approval for rental apartments, and so on. It is essential to possess a good credit score in order to have a smooth and good financial future.
3) How can I improve my credit score using my credit card?
You can improve your credit score by making early payments on your credit card. By The time you get your credit card statement, you will have a low balance on your credit card.
4) What are the various types of loans?
- Personal Loan.
- Business Loan.
- Gold Loan.
- Home Loan.
- Loan Against Property.
- Two & Three Wheeler Loan.
- Rental Deposit Loan.
- Personal Loan for Self-employed Individuals.
5) Why is it essential to check and be aware of your credit score?
Checking your credit history and credit scores gives you an awareness about your current credit position. Regularly monitoring your credit reports can aid you in determining what lenders are looking for. Checking your credit reports can also help you find out about inaccurate information, identity theft, incomplete information, and so on.