Over the past couple of years, borrowers across the country have developed an increased awareness about maintaining their credit scores.

But how does a good credit score actually help you out in the long run? That is exactly what we will be answering in today’s blog post.

What Is a Credit Score?

One of the first and most important aspects we need to understand is the actual meaning of credit score and its large scale impact.

In simple terms, a borrower’s credit score is a numerical value that is assigned to them by the credit rating agency, and this is an indicator of their creditworthiness, that is their exact capacity to borrow money and repay the same comfortably.

In India, there are three main credit rating agencies, CIBIL, CRIF Highmark and Equifax, and all of them rank you on a scale of 900, where any score above 750 is considered to be best fit while applying for a loan.

While the exact calculation of credit scores is controlled via an automated computer algorithm, it is well known that credit rating agencies take into consideration four main factors while calculating your credit score, and they are as follows.

●      Total number of loans you have taken in the past

●      Total amount of credit you have utilized so far

●      Total number of on time payments you have made

●      Total number of late payments you have made

Taking all these factors into account, you are assigned a score on a scale of 900, and a score of 750 or above is generally considered to be good.

Now, while at first glance it might seem that maintaining a score of 750 on a scale of 900 is easy, in reality, there are several things you need to regularly keep in mind to maintain such a high score, and thus naturally, it arrives with certain rewards. Shared below are the most significant of them.

1.      Lower Interest Rates

One of the first and frankly the biggest advantage of having a good credit score is the low-interest rates you can avail on any credit instrument.

Be it a personal loan from a personal loan app like ZinCash or a traditional loan from a financial institution; a good credit score essentially guarantees that the lender will be more than willing to offer you a better deal on the loan, thus empowering you to seamlessly leverage the power of a loan without burning a hole in your pocket.

2.      Faster Application Approvals

Next to the option of enjoying a competitive rate of interest on all lending instruments, having a higher credit score also extends you the ability to gain faster approvals on all your loan applications.

Since in any type of credit instrument, the lender first checks the borrower’s credit history, you will always clear this step with ease ensuring that you have access to the money when you need it the most. Combine this with leveraging record turnaround times in instant personal loan app such as ZinCash, and you will have access to the loan amount before you know it.

3.      Wide Array of Discounts

While borrowers mostly consider applying for either personal or traditional loans when they have a good credit score, another credit instrument they often unknowingly ignore is a credit card.

Since most credit cards across the country are mostly unsecured, having a high CIBIL score not only means that you have the option of applying from a wide catalogue of available credit cards, but you also get the added benefit of customizing them as per your exact needs.

For example, there is a credit card available in India for almost every type of consumer.

Right from those who want to save on fuel costs to those who want to save on holidays, the list is endless and having a high CIBIL score gives you unhindered access to all these credit cards.

Along with this, since credit cards generally arrive with an array of discounts and cashback, you have the added advantage of saving money on every transaction. Thus, having a good CIBIL score literally pays you back.

4.      Higher Loan Amounts

When you are applying for any credit instrument, be it a credit card or an instant personal loan, one of the first things every borrower looks into is the approved loan amount.

In India, loans generally have a range of ₹10,000 to ₹50 Lakhs, while credit cards generally range from ₹3000 to ₹10 lakhs. Now having a good credit score essentially makes you eligible to always be approved for a higher credit limit, meaning you will have more money in your pocket to spend.

A higher credit limit not only means that you won’t have to compromise with your wants and needs, but it also gives you the added benefit of earning more cashbacks and rewards on every purchase you make.

5.      Longer Loan Tenures

While having a higher approved loan amount is a dream come true for many, without getting approved for an equally long repayment period, repaying the borrowed amount can easily become difficult even for the best of us. However, another advantage of having a higher credit score is essentially the fact that you will easily get approved for a longer personal loans tenure on every loan you apply for, as the risk for the lender is less.

A longer loan tenure not only guarantees you less financial stress via lower EMIs but also gives you the flexibility to save money while repaying your EMIs at the same time.

In Conclusion

At first glance, the real impact of having a good credit score is oblivious to most people, however as we have displayed in this blog post, the advantages of maintaining one make it worth it.

So, do you have a high credit score? Let us know by commenting below.