How Does Your CIBIL Score Impact Your Financial Life?

16-April-2016 written by : FSI-Team

Yes, money is important. In order to fulfil any basic requirements or to enjoy luxuries like an expensive trip abroad, one needs money. Given today’s economic conditions, one has to seek help of credit to move even inches closer to fulfilling ones dreams. Credit is the bridge that helps an individual cover the gap between what one’s pocket allows to buy and what one aspires to buy. For example, given your monthly disposable income you can only purchase a Maruti Suzuki Alto k10 but with the help of a car loan you can afford to buy a Maruti Suzuki Swift Dzire. So, credit helps you reach for products and services beyond your means, brings you greater financial satisfaction and boosts your affordability.

Since finances play such an important role in your life, it is imperative to note the role of CIBIL score behind them. Literally speaking, CIBIL scores have the potential to break or make your financial hopes. You may have tall aspirations on the expected debt inflow but if that does not happen then you will be left clueless with just a bag of broken pieces of your dreams.

The hand of CIBIL Scores

Firstly, you must log in today on to the bureau’s website, and order a copy of your report. Currently there are no free cibil score available to us in India. So, you will have to make a payment of Rs. 550/- and seek your report. Alternatively you could also get on to and get a copy from them plus an analysis from experts on how you have done credit-wise in the past for the same price.

As you may know, CIBIL score check is the first thing that lenders do when scrutinizing your loan application. Once you receive your personal copy sit down and carefully go through your report. If you are not that savvy with financial jargons, then you may want to seek help of experts like financial consultants to explain to you on what your report really states. This will help you understand a lender’s stance when they are considering your application.

Having a good score means, a probable bank or other lending institution will be impressed with your track record. Whereas, a poor score will disappoint a prospective lender and nip your credit aspirations in the bud.

Plan your finances in advance

  • Monitor your own spending patterns and get on top of bigger things in life. Try and cut down on avoidable expenses, even if they seem to be small. For example, you like to get yourself a coffee and a cheap snack everyday while returning from office. It may seem to be a petite amount but spending the same amount everyday may add up to a sizeable portion of your income. Maintain a diary to budget your income and expenditures.
  • Saving money through cost cutting can act as an emergency fund which you can use instead of seeking credit. Saving in chunks can help you set up a contingency fund which you can rely upon in times of emergency.
  • Most of us tend to live believing tomorrow will never come and even if it does we will know how to tackle it. Unfortunately, reality is far from it. One of the tools in being prepared for the future is to invest in various insurance policies such as family health insurance plans. These policies save your pocket from spiralling into financial ditches. Thus, once again the need for credit becomes lesser.
  • Credit opportunities can be highly alluring. Don’t give in to the temptation to use one. Seek credit only when you feel there is a dire need for it. When you curb your desires to use credit, you keep yourself from coming under a debt burden in future.
  • Try and take maximum advantage of tax benefits and rebates. This saving can also be put in the same contingency fund which can be used in an emergency or may be pay for a vacation abroad. Then you don’t need credit for it and you don’t have to be worried about your score too.
  • Review your plan regularly and look for cracks or loopholes to make sure you minimize your losses.
  • All of these measures help you in using loans and credit only when necessary. If you maintain a good habit of being in control of your finances, there is a very good chance that you will be able to maintain a high positive score. Once you have that it will be easier to take loans when you actually need them.

    Assuming that an individual has a poor score. Such a person is perceived to be either reckless with his or her money or was struck with misfortune. Either ways, bankers are put off and are wary of extending finance to them.

    Thus you see depending on your score, your financial planning can either strengthen or destabilize.

    Pearls of Wisdom

    Money in the form of credit becomes available to you only when it has crossed the hurdles of CIBIL rating. Ofcourse, there are more factors under consideration but your credit history plays the widest role in adjudging your creditworthiness. You can read more about the factors that affect your score and also on ways to improve your credit score on our blog.

    Having a good score not only makes credit readily available to you at your beck and call, but also puts you in a beneficial position where you can negotiate further on lower rates of interest and favourable terms. Till then, plan ahead for your financial needs and play safe.



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