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There are enough advantages to a good credit score. Therefore, before applying for a loan, a prospective loan borrower must be conscious of the advantages in order to arrive at the loan most suitable to his needs and requirements.
- HIGHER APPROVAL CHANCES
When you apply for a loan or credit card, any lender takes out your credit report and reviews your credit score. This is regarded as a hard investigation, and if such an inquiry is conducted, the credit score takes a hit. If your application gets refused, the effect may be irrevocably adverse. But in the case of a strong credit score, due to your solid credit history and previous instances of frequent and timely repayments of the loan amount, the likelihood of your loan approval is extremely high.
A good credit score also determines that several lenders have not given numerous loans to you; that you have not built up debt, making it impossible for you to repay the balance of the loan. The lender is also assured that the loan sum will be repaid in full and on time, so the chances of approval are extremely high and almost guaranteed. For a home loan, if your CIBIL score is in the range of 700-900, you can expect up to 85 percent of the total cost of the house. However, in the case of a personal loan, which is an unsecured loan, and therefore the amount of the loan will depend on the stated intent and indeed the CIBIL score. There is no defined CIBIL score that qualifies you in the case of a car loan, but it is advisable to have a score above 700 to remain assertive when applying for a car loan.
- LOW-INTEREST RATES
Low-interest rates are the primary advantage of maintaining a good CIBIL score. Depending on the likelihood of default, interest is paid. Sound creditworthiness and frequent and prompt repayments of past loans are measured by a good credit score. The risk of default is small, and the incentive is thus expressed in comparatively low-interest rates.
- HIGHER LIMITS
A good credit score reflects that you’re a responsible and worthy borrower. Therefore, the lender will not hesitate to give you a higher credit limit or a comparatively higher loan sum on your card.