Credit score plays a crucial role in getting financial assistance. A good credit score also called a CIBIL score, can help individuals get loans at better interest rates and terms. However, individuals with lower credit scores have limited loan options and receive high-interest loans. Furthermore, they face more troubles while availing of loans due to the possibility of rejection. It is important to check free CIBIL score via the CIBIL score app to manage and improve creditworthiness. The article will help you to know the importance of credit score in obtaining a loan.
A credit score refers to a number that determines an individual’s creditworthiness. It is a three-digit number ranging from 300 to 850. Creditworthiness tells about the individual’s financial behaviour and sensibility toward managing their finances. It also provides information about how likely an individual can repay their payments on time. Here is the list of credit score ranges and their consideration in the financial market.
|580-669||Fair or Satisfactory|
Credit scores can be evaluated based on five factors, i.e., credit history, credit owned by the individual, new credit, length of credit history, and the credit mix. The range between 600 to 850 promises a better loan approval rate and added perks. Therefore, it is important to maintain good credit scores to have multiple benefits in financial assistance from banks and other financial firms.
When an individual applies for a loan, lenders always check the applicant’s credit score before availing of the loan. It assures lenders about a specific individual based on their repayment history within time.
A good credit score is key in approving loans at lower interest rates. In addition, it also provides power to the applicant to negotiate the terms of the loan so they can get the advantage of repaying the loan amount for a longer period at a lower interest rate. It helps improve the borrower’s monthly budget, making them live peacefully.
However, individuals must maintain their CIBIL score by timely paying bills, regularly checking credit reports, using credits, and avoiding accumulating debts.
Below are the benefits of good credit scores that can aid in sanctioning loans.
Individuals with low credit scores can face problems while applying for a loan. A bad credit score hinders obtaining better opportunities during loan sanctioning. Some of them are discussed below:
If an individual has a low credit score but wants to apply for a loan and avail of benefits, they must follow the steps to improve their credit score.
Credit scores play a critical role in the sanction of loans. The high credit scores ease obtaining the loan by providing the firm stand for negotiation. Furthermore, individuals can also attain more benefits over loans and credit cards.
Likewise, individuals with low credit scores are advised to maintain their credit scores by paying bills on time and clearing debts before applying for a loan. Check the free CIBIL score using the CIBIL score app to follow the proper credit score improvement plan and to track the score consistently reflecting positive changes.