29-Sep-2017 written by : FSI-Team
Saving big bucks is every one's dream. Each one of us, being part of the large middle class segment I can say that with a hand on my heart, tries to do little things that lead to savings. Running the air conditioner at a higher temperature or running it just about a few hours, waiting for that sale to buy stuff, eating out less frequently or avoiding that coffee shop when you have some time on hand that you need to kill while waiting for other meeting to start are a few from the huge list of things that we do or do not do to save money.
However, it is rather unfortunate that we do tend to forget an important aspect that can easily lead to huge savings over a period can facilitate adding a fortune into our financial reserves. What I am talking about here is your CIBIL score calculation.
While we focus on little acts, we are unable to view the larger picture and hence are unable to focus on improving our credit score. Let us see how a higher credit score can lead to higher savings.
Would like to state that building a fortune needs two things. First, the opportunity to make money and second, the money itself. There is no doubt about these two factors being the ones that drive one to achieve his financial objectives. One may have money but if not invested correctly, it can lead to eroding the funds. Similarly, one may get the opportunity to earn big bucks, but lack of funds can lead to losing out the opportunity to add corpus to the wealth.
Let me elaborate it a little more on this for your benefit and clearer understanding. I would sight an example to explain this little better. Ramesh Babu is looking at buying a house that he has been dreaming of for a very long time now. He has a good salary and can easily afford to take the plunge now. He has also been diligent and has been able to save money for the down payment. Let us assume two situations here. First that Ramesh Babu has a high credit score and second that he has a low credit score.
In case he has a low credit score his loan application will get declined and he will not be able to fulfill his desire of shifting into his own house. And if he has a higher credit he will be able to get a loan and will be able to accomplish his desire easily. I think this is the basic and each one of us understand this.
Ramesh Babu since is having a very good credit score, was able to derive benefits. Most importantly, he was able to get a better home loan interest rate. The banker was more than willing to bring down the interest rate to be able to retain him from moving on to competition. This would eventually mean a lower EMI and the loan running off faster. The savings that Ramesh Babu has had on a lower rate of interest getting charged would not have been possible otherwise. Just to mention, a reduction of interest by 1% on a loan of 50 lakh for a loan term of 20 years would lead to savings of lakhs of rupees. I am not mentioning the amount since I would want you to go and discover it for yourself. You can even visit creditsudhaar.com and check out on the EMI calculator given in the bottom of home page.
Owing to a higher credit score, Ramesh Babu was able to get the loan with ease and in a shorter time. Had he not been able to get the loan fast, he would have lost the deal since the seller was in a hurry to sell it out and had agreed to lower the cost by a few lakhs only on the condition that the deal would get closed within a month.
So as we see from the above example, a higher credit score can lead to saving a lot of money. And the fact remains that this is only one example. So go ahead and keep a watch on your credit score.