We all know about the Cibil score that it is a three-digit number ranging from 300 to 900. This score determines a person’s creditworthiness. This score is determined by a person’s credit history and other financial information, such as loan repayment behaviour, credit utilisation, and credit card usage. Earlier, we discussed about how Cibil Score is calculated and now we will learn about what is the importance of Cibil Score?
Why does a Cibil Score Matters?
When someone applies for a loan or credit card, a Cibil score is one of the most important things that lenders look at. A person with a high Cibil score is responsible with credit and has a history of paying bills on time. This makes them a low-risk borrower, which increases their chances of getting a loan or credit card with a lower interest rate.
On the other hand, a low Cibil score shows that a person has missed or been late on payments, used a lot of credit, or not paid back loans. This makes them a high-risk borrower, so lenders may refuse to give them a loan or credit card or charge them a higher rate of interest.
What are the benefits of a Good Cibil Score?
Having a good Cibil score offers several benefits, including:
- Easy loan and credit card approvals: A person’s chances of getting a loan or credit card with a lower interest rate go up if they have a good Cibil score.
- Lower interest rates: A person with a high Cibil score can negotiate for a lower interest rate, which can lower the overall cost of borrowing by a lot.
- Higher credit limit: People with a good Cibil score are more likely to get a higher credit limit, which can help them meet their financial needs.
- Better ability to negotiate: When it comes to loan and credit card terms and conditions, a good Cibil score gives a person more negotiating power.
Creditors evaluate applicants based on their CIBIL scores to determine whether or not they are a good bet to pay back a loan or credit card balance in a timely manner. A high CIBIL score suggests that a borrower can be trusted to make timely payments on their loans. This not only improves your chances of getting approved for a loan or credit card, but it also gives you more bargaining power when haggling over terms, such as interest rates and credit limits.
A low CIBIL score, on the other hand, may indicate that a person regularly misses payments, pays them late, or carries an excessive amount of debt. This makes it more difficult to get credit and may lead to higher interest rates and less favourable loan terms.
In short, a person’s CIBIL score is important because it shows how creditworthy they are and can affect their ability to get credit and the terms of that credit. So this was all about what is the importance of Cibil score? Hope you are enjoying reading our business blogs. Keep following Guest Blogging Pro for top-trending business blogs.