What is Importance of a Good Credit Score?
A good credit score is one that is above 750 and closer to 900. Simply securing a good credit score will hold a lot of advantages when you apply for a credit card or loan, as banks consider a high CIBIL score as best for certifying that you are a creditworthy person. Here is a list of ways a good credit score will help you in your financial journeys.
- Higher Credit Limits: In case of a good credit score, the credit card and loan providers trust you with higher amount for spending on and borrowing, respectively. The trust lenders generate comes from your stable financial records and habit of timely repayments, with no negative markings from lenders as seen in the credit report.
- Credit Cards: It is easier to obtain credit cards on a good credit score. If you have a proven record of being a person who pays credit card bills on time and makes the payment for bills in entirety than just the minimum amount, then you shall receive credit cards without hassles. Also, your information about EMI payments will help credit card providers to know if they can rely and provide you a credit card.
- Loans: Just like credit cards, your repayment and credit history comes into play for deciding on loan application approval or rejection. A good score will indicate a quicker process for loan applications, and approval for the same. A bad score will mean that you may not get a loan sanctioned, or even if you get one approved, you pay a very high interest rate.
- Rate of Interest: For any loan program, there is a corresponding rate of interest charged and EMI scheme involved. If you have a strong credit score of 750 and above then perhaps the bank or lender will offer a lower rate of interest, which you can further negotiate given your clear financial history.
- Renting House: For landlords, your credit report is very important as well. It aids them to get an insight into your repayment ability, thus the capacity to pay rent. If you have not defaulted in past with payments, it signifies as a green signal from the landlord that they are prepared to have you as a tenant.