How does a good CIBIL score save money

15-Oct-2015 written by : FSI-Team

Free Cibil Score

A healthy credit score enables to speed up your loan process. Although lending institutions and banks do not advertise that low interest rates or benefits are linked to high credit score, it is definitely a key factor on interest being charged. The lower the credit score, the higher the rate of interest. Low credit scores may even lead to rejection of loans. Hence, a good CIBIL score helps in saving a considerable amount of money.

A good CIBIL score can be use to one's advantage. These are some of the factors that make it possible to save money if you have a good CIBIL score:

  • Saving on processing charges: The processing fee for application of home loan is non-refundable. This fee can range between 0.25% and 1.5%. Hence, if the financial institution or bank rejects your loan due to a bad credit score, you might end up losing all the money which has to be paid irrespective of the loan being sanctioned or rejected. A healthy credit score boosts your chances of approval right from application of the loan and commencement of saving money for you.
  • Lower rates of interest: A high credit score might get you personal loans on lower rates of interest. Healthy CIBIL score increases an individual's capacity to negotiate better rates of interest on the loan rates. A lower interest rate even by 1% might lead to substantial savings.
  • Negotiation Power: A good CIBIL score ensures that you have the power to negotiate. This makes it easier for you to apply for a loan with a certainty of approval. With the ability to bargain, you have the option of choosing a lender that offers optimum interest rates along with competitive processing charges and terms of pre-closure. Some financial institutions may even waive off the processing charges or pre-closure penalty for individuals with high credit scores.
  • Missed contingency: On several occasions, you would want to get your loan application for a car to be processed promptly due to special offers. Many car dealerships announce limited discounts around festivals or at the end of the year. Higher credit score ensures that your loan applications are processed faster in cases where you would want to avail such discounts. This is especially essential as these offers generally last for a limited time period.
  • Home loans: There are often inaugural discounts offered by developers. Home owners who place their houses in the market also like the transaction to be processed within a stipulated time frame. In these circumstances, a fast paced home loan process can come in handy. A healthy credit report is the way to go for quick loans that may help you in saving a substantial amount of money.

Missing such opportunities due to delay in the loan process owing to your low credit score could lead to huge losses of tens of thousands of rupees. A good CIBIL score can hence assist you in accessing credit at economical rates with fewer hassles and in lesser time.



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