Just like having a healthy body, mind and soul are germane to one’s growth and happiness, having a healthy credit profile is analogous to one’s financial freedom, sense of security and growth. In the absence of stress, a person is calm and happy. Money cannot buy happiness. But what money can buy makes us happy. With more money comes more power. And everyone wants more power. Either you earn more money or save more, either ways your disposable income increases. A higher credit score lets you save more money and therefore brings greater happiness. Let us elaborate.
How a High Score Helps
A good credit score is a pre-requisite for fulfilment of any loan application. When a person has a high CIBIL score following are the advantages they can enjoy:
- Most people are aware that lenders prefer individuals with top layered scores because it reflects a healthy credit profile of the borrower. It shows that the borrower has been responsible with repayments in the past and has shown the right intentions. This means easy access to funds, which boils down to having more money.
- Those with elite credit scores can negotiate with lenders for lower interest rates and save money on interest costs. Yes, this is a lesser known fact of better credit scores. If you have scores to boast about, banks and NBFCs would be vying for your business. The borrower ends up being the beneficiary of competition among lenders for business. They often agree to lower interest rates. That is also because a higher score means lower risk and therefore a lower rate of interest.
- Top ranging credit scores reveal more about a person than just credit related behaviour. It shows that the person is careful with money and must indulge in careful financial planning. Such a person not only takes care of the debts taken, but also makes sure they save enough for future and have adequate investments in diverse financial instruments.
Statistics have revealed, 95% of people with higher scores had more in savings. With more savings and investments, one becomes less dependent on credit in future and further saves in costs such as interest payments, processing fees, annual charges, etc.
- A person with credit scores greater than 750 enjoys a sense of security. Such a person is free from anxiety about future borrowing. They relax and are at peace for they know the doors to funds are open for them, provided they meet other eligibility parameters too.
- For some people it is a matter of prestige to have a good credit score. Some people can be easily stressed out with the idea of being embarrassed by a rejected loan application. One can therefore deduce that with greater scores comes greater happiness.
How to Achieve a Good Credit Score
By now we have established that a good score is the cornerstone for happiness. Here are a few pointers on how you can achieve a good credit score:
- It is important to make on time debt repayments to maintain a healthy score. Credit cards play an as important role in your score as do other loans. Streamline your payments and set reminders for due dates to avoid being late.
- Set standing instructions on salary accounts for auto debit for loan EMIs. This way you can be sure you do not default on your repayments.
- Try to avoid window shopping for loans. Too many hard inquiries leads a drop in your score.
- Prefer seeking secured loans than unsecured loans.
- Avoid cancelling older credit cards as it brings down the credit age.
- Keep lower utilization ratio on your cards to improve credit score.
While everyone's definition of "being happy" is different, having a good credit score is one of them. A higher credit score is synonymous with a person's attitude towards one's finances. You must have heard people say “use money for no one can carry it to grave" and that "you live once so live to fullest". While the idea of having more money is to have higher purchasing power and shopping is indeed therapeutic, but spending too much can have its own drastic consequences.
A priceless piece of advice from our elders must never be forgotten, "save money for rainy days". With a higher score comes a greater sense of security, self-belief and thereby more happiness. Healthy scores reflect a healthy credit profile. A healthy credit profile makes it easier to access funds and therefore brings more happiness.