15-Jul-2017 written by : FSI-Team
It takes a lot of hard work to maintain excellent credit and stay at the top of the credit score ladder. But it is definitely worth the effort as a good CIBIL score helps you take charge of your financial life. 4 ways in which an excellent credit rating will help you save money and empower you are:
When you are in the market to get approvals for home loans, car loans or any such big ticket items; your CIBIL score matters a lot. A good score gives you assurance that your application will get approved. A low CIBIL score on the other hand makes you a risky candidate and raises the lender's concerns about your reliability. Since lenders do not want to risk their money with a person who is likely to default on his loan, your application might be rejected.
So if you adhere to best credit practices, you can be rest assured that you will easily qualify for loans when you need them. You will have a greater negotiation power in determining the terms and conditions of the loan.
Even if you are not looking at purchasing a house in the near future you can use the score to your advantage while renting a house. Landlords too have started checking the score before renting a place to verify whether you are responsible in paying back your dues.
Your creditworthiness largely determines the interest amount you pay on the loans. Higher the score lesser is the interest amount that you pay each month on credit card dues, mortgage and other instalment loans. For example, when you take an axis bank personal loan there is a direct correlation between the CIBIL score and the rate of interest that is charged. If you have a bad score then you pay a much higher interest rate than someone with an excellent score. So having an excellent credit rating helps you save a lot of money in the long run.
This benefit becomes extremely important when the loan amount is high and the tenure of the loan is long. Even a small difference of 0.5% interest rate can lead to significant savings. As the cost of borrowing reduces you can dedicate more funds to pay off the balance of the loan and reduce your debt much faster.
CIBIL score is no longer limited to financial matters. It may even affect your ability to land into your dream job. Like lenders and landlords many employers too have started using the score as a means to judge your reliability. Especially when you are applying for a position in finance, employers check your credit standing as a part of the hiring process. A good CIBIL score helps you to demonstrate that you are financially responsible and suitable for the job that you have applied. A poor credit rating may create an impression in the mind of the prospective employer that you are not a reliable individual. This may affect your ability to secure the job that you want.
So if you are searching for a job, you should be concerned not just about your resume and the interviews but also your credit rating. A solid credit history serves as a proof that you are an organized person who plans ahead of time, schedules activities and meets deadlines. You can use your CIBIL score to demonstrate your trustworthiness especially for positions which require you to handle sensitive data.
The insurance business involves risk. Many car insurance providers have started using the credit score to set insurance rates. People with a high score are seen as a lower risk. Hence they can bargain for lower insurance premium rates. This will help you save thousands of rupees over your lifetime.
Hence a good CIBIL score plays a vital role in your financial life. It raises your negotiation power with the lenders, lowers your cost of borrowing, helps you get your dream job and also reduces your insurance premiums. So don't neglect your score and miss out on these opportunities. Make on-time payments and manage your credit wisely so that you accumulate this valuable asset.