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Why Do You Need a Good Credit score?

importance of credit score

Credit score is the adult equivalent of grades. It requires a good credit score to get credit products such as credit cards and loans. A good credit score makes a lot of things possible. It acts as an benchmark to receive any credit products such as credit cards and loans. Also, your employers can check your credit score before offering you to the job.

A good credit rating is important as it shows that you can handle debt responsibly and pay your dues on time.

Read: How to Build a Credit Score from Scratch

Here’s why you need a good credit score

good credit score

Get loans

After you apply for a loan in any financial institution, the first thing that the lender does is look at your credit worthiness from the various credit bureaus such as CIBIL.

Banks are more likely to disburse loans to high CIBIL score individuals, as the risk of lending to these customers is significantly lesser than a person with a lower score.

A good credit score can help you to pre-approved loans

Financial institutions are making it easier for individuals to secure loans. Banks and NBFCs want to reward their customers with a good credit score with instant loans such as personal loans. So, in case of an emergency, such as a sudden health expense, you can avail an instant loan without waiting days to get your loans approved.  

Get loans at attractive interest rates

Customers with high CIBIL score get loans at attractive interest rates. Although the rate of interest may look just tad lower than the prevailing interest rate, you can save thousands of rupees depending on your loan amount and tenure.

Get credit cards with higher perks

Everyone wants to lay their hands on a premium credit card. Premium cards come with higher credit limits and attractive discounts, lounge access and annual travel credits. However, not everyone can get a premium credit card. A good credit score will help you get premium cards.

Have more options to choose from

When you have a good credit rating, many financial institutions will be happy to offer you loans. As a result, you can choose the bank or NBFC with favourable interest rates and other charges. Hence, you don’t have to rely on one bank.  

Use your good credit score to get loans with higher limits

Sometimes, bank loan applicants may not receive the entire loan amount that they have applied for. To arrive at the loan amount, banks consider a few factors such as the income of the applicant and the credit report. If you have a higher credit ranking, you may be eligible for a higher loan amount.

Get that job

If you are seeking employment, organisations may want to see your latest credit report. They might want to make sure you are reliable and have paid your loan dues on time. It can also help future employers to check for any past bankruptcies. A bad credit report can act as a deterrent in getting the job you are looking forward to. 


Conclusion:

A good credit rating is the adult equivalent of grades. A high credit rating can help you get loans of your choice at attractive interest rates. You may also become eligible to get pre-approved loans, a high loan amount, etc. Hence, there are many benefits. Now that you know the different benefits of a high credit score, you can look forward to improve if you have a low credit score. If you don’t have a credit history, you can easily build a credit score through a secured credit card


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