Credit scores play a significant role in a borrower’s financial health. It is a three-digit number that ranges between 300 and 900 and determines a borrower’s creditworthiness. If the credit score is higher than 750, the applicant applying for a loan will enjoy better chances of availing of a loan with favorable terms.
Lenders, nowadays, are using technological advancement to check the identity of potential customers through CIBIL e verify. It is a biometric verification that connects lending organizations to third-party databases to identify potential customers and flag suspicious data that indicates high risk.
To be deemed eligible through e-verification, individuals need to maintain a high score. In this respect, making timely payments, clearing off existing debts on credit cards, maintaining a low credit utilization ratio, and checking credit reports frequently can be helpful.
Read on to know how a credit score can benefit borrowers in maintaining their financial health.
Benefits of a good credit score
A good credit score comes with a host of benefits, including –
- Savings on interest rate – When a borrower avails a high loan amount to finance big-ticket purchases, even a small reduction in interest rate can save a significant sum of money.
Borrowers with the highest credit score will get the advantage of securing the lowest rate of interest. The less money one pays via interest, the faster one can pay off the loan amount.
- Quick approval for credit cards and loans – Highest credit scores will allow borrowers to avail the most rewarding credit cards in the market, including those that offer the lowest interest rates.
One can also enjoy balance transfer offers that will eventually translate into significant savings over time.
- Determines current credit standing – The credit report informs about a borrower’s financial position and where should they focus.
The detailed report is compiled through a summary of past and present credit transactions. A high credit score is instrumental to maintain a favorable report.
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Prospective borrowers can check CIBIL score through PAN card free online in India by submitting their essential PAN card details. Since PAN card is linked with borrowers’ financial accounts and tax payments, it helps CIBIL access the data faster.
- Get higher credit card limits: If a borrower’s credit score is higher, the chances are greater of obtaining a higher spending limit on credit cards. Financial lenders determine a borrower’s creditworthiness through CIBIL e-verify and understand their repayment behavior before setting the card limit.
- Negotiating power: A higher credit score allows borrowers to negotiate a lower interest rate with loans or credit cards. With a good score, borrowers can also receive attractive offers and deals.
This includes pre-approved offers that make the borrowing experience smooth and hassle-free. Such lucrative offers are available for several financial products, including secured and unsecured loans. Interested applicants can check their pre-approved offer by submitting their essential contact details.
Customers with a poor credit score can undertake essential measures to improve it. Following are the quick tips to improve this factor for easy loan approval.
Quick tips to improve credit score
Following are the brief pointers to help enhance one’s credit score, and pass the CIBIL e-verify process launched by lenders –
- A borrower must frequently review his/her credit report to avoid discrepancies that can lead to a reduced credit score.
- One should maintain a credit utilization ratio below 30% and avoid adding on to expenses.
- Applicants should keep their old credit accounts active, which will help determine their borrowing history.
- As borrowers know how payment history impacts the credit score, it is better to clear debts or payments on time and avoid late payments.
Hence, in a nutshell, a good credit score can offer substantial savings and other exclusive benefits along with favorable terms and conditions when it comes to availing of any external financing.