Credit Score: Why it is important to have a better credit score, know how it helps in getting a loan

Credit Score: Some people get loan easily from the bank, while some people have to make a lot of papad in it. Actually, whether you will get a loan from the bank or not, it depends on your credit score. Those who have good credit score can get loan easily. Credit score reflects the credit history of an individual. It mentions the number of credit accounts held by an individual, total debt, repayment history and inquiries made by the borrower for the loan. This score is like a ‘first impression’ in a loan application. However, this does not mean that the CIBIL score alone decides whether the loan application is approved or not, but being higher increases the chances of the loan application being approved.

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What do experts say

Neeraj Dhawan, managing director, Experian India, says, “Consumers who have a good credit score have less risk of losing money to the lender. Similarly, the chances of the applicant getting a loan at a lower rate of interest also increase when the risk is lower. He further adds, “The credit score improves when the loan is repaid on time and regularly. In this way, getting a loan becomes easier with a better credit score. An advantage of having a better credit score is that the borrower has the option of several banks and financial institutions before taking a loan. He can choose the best bank for himself by comparing other important things including interest rate.

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Why a good credit score is important and how it helps in getting a loan

According to experts, if your credit score is above 750 then it is considered as a good credit score. Having a credit score of 750 or more increases your chances of getting a loan or credit card. In this, the borrower also gets attractive interest rates.

• Getting loan becomes easyA credit score of 750 or more is generally considered a good score. Dhawan says, “Lenders offer attractive offers to consumers with a good credit score. This not only makes it easier to get a loan, but also offers discounts in interest rates and processing fees.”
• Loan is available at cheap interest rateA good credit score can help in getting loans at affordable interest rates. Since there is less risk of losing money for the lenders, they usually offer a cheaper rate of interest to the borrower.
• Loan available for long tenureKeep in mind that the better your credit score, the more loan amount you can get. Along with this, you can also get more time to repay this loan.
• App approved quicklyPeople who have a good credit score, their loan application does not take much time to get approved. Actually, through the credit score, the bank estimates whether you will be able to repay the loan easily or not. Based on this, the bank approves your application quickly.
• Discount is available in other charges including loan processing feeLender can also offer you many attractive offers based on your credit score. For those who have a better credit score, the bank can offer a discount on processing fees and other charges.

(Article: Priyadarshini Majhi)