A credit score is a crucial factor when it comes to applying for loans, credit cards, or even renting an apartment. Having a high credit score is essential because it can help you secure better interest rates, higher credit limits, and favorable terms for loans and credit cards.
The higher your score, the more likely you are to be approved for credit and the better terms you can get. This is because lending institutions see you as a lower-risk borrower when you have a high credit score, as you have a proven track record of paying back debts on time.
Benefits of a High Credit Score
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Lower Interest Rates
Interest rates refer to the cost of borrowing money, usually expressed as a percentage of the total amount borrowed. Having a high credit score can significantly reduce the interest rate you will pay on personal loans. This is because lending institutions view borrowers with higher credit scores as less risky and are therefore more willing to lend money at lower interest rates.
With a high credit score, you secure lower interest rates on loans, which can translate to significant savings over time. If you are planning to apply for a personal loan, it’s crucial to check your credit score and take steps to improve it if necessary. Top NBFCs require a minimum credit score of 630 to be eligible for personal loans.
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Easier Approval For Loans
When you apply for a loan, the lending institutions will evaluate your creditworthiness to determine whether you are a suitable applicant for the loan. This evaluation typically includes a review of your credit score, credit history, income, and other financial factors.
A high credit score can significantly increase your chances of getting approved for a loan. This is because lending institutions view borrowers with higher credit scores as more financially responsible and reliable, and therefore less risky to lend money to. If you have a high credit score, you are more likely to be approved for loans with favorable terms, such as lower interest rates and higher loan amounts.
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Large Loan Amounts
With a high credit score, you are more likely to qualify for larger loan amounts of up to Rs 10 lakhs with the best interest rates. This is because lending institutions view high credit scores as an indication of a borrower’s ability to repay the loan on time. Therefore, having a high credit score can help secure larger loan amounts.
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Flexible Tenure
A high credit score can provide applicants with more flexibility when it comes to loan tenure. Several financial institutions offer longer repayment terms of up to 48 months on personal loan to borrowers with high credit scores. Longer repayment terms can help borrowers manage their loan repayments more effectively.
Conclusion
A high credit score can provide many hidden benefits that may not be immediately evident. These benefits include higher loan amounts, lower interest rates, flexible repayment tenures, easier approval for loans and credit cards, and more.
By taking steps to maintain a good credit score, such as paying bills on time, keeping credit card balances low, and checking your credit report regularly, you can unlock these hidden benefits and improve your financial well-being.
If you are looking to apply for a personal loan, having a high credit score can also improve your chances of approval and lead to more favorable loan terms. So, start building and maintaining a good credit score today to reap the many benefits it can provide.
About the Author
Amaira Sharma is finance expert and former business growth strategist who has more than 8+ years experience in the industry, now she helps others to get better financial stability and standards. She loves to write useful tips on personal finance and businesses.