How Having A High SBI CIBIL Score Can Help Your Financial Health?

By now, it’s become a no-brainer how vital the cibil score for home loan has become over the years. After all, owning your house with the help of a housing loan is a dream almost all of us nurture. So, over the years, credit score has slowly but steadily evolved into an asset that is on par with critical importance in relation to our financial lives. Having a high credit score as a result of engaging in credit-healthy behaviours results in not just one but numerous benefits, all of which work together to improve your overall financial health.

Here I’m going to go into a little more depth here and explain crucial six important ways in which having a good credit score can be beneficial to your overall financial health:

Get lower interest on loans.

The use of risk-based pricing in the process of determining the interest rates that will be charged to potential borrowers has been adopted by a growing number of financial institutions. Because loan applicants with higher credit scores often involve reduced credit risk, lenders attempt to entice such applicants by rewarding them in the form of lower interest rates. This is done in order to maximise their chances of being approved for the loan. On the other hand, lenders will charge higher interest rates to applicants who have a lower sbi cibil score as a kind of compensation for the increased credit risk associated with lending to these individuals.

Because the risk-based pricing methodology in case of cibil score for home loan might be different amongst different lenders, it is important to examine the interest rates on loans given by as many different lenders as possible before settling on one particular lender. 

Increased scope to qualify for loans.

The credit report of the person applying for a loan is obtained by the lender so that they can assess the applicant’s creditworthiness and previous repayment history. Those with a credit score of 750 or above are typically considered financially more disciplined, and as a result, they have a smaller risk of defaulting on their credit obligations, which results in increased odds of having their loan application approved. On the other side, lenders tend to view people with lower credit scores as riskier prospects; as a result, applicants with poor sbi cibil score may have a more difficult time getting their loan applications accepted.

Boost the likelihood of getting a credit card

When used for purchases, credit cards provide users with a number of valuable perks in addition to the ability to access fast credit, including rebates, cash backs, rewards, interest-free payments, and other opportunities, as well as discounts. However, just as is the case with loan applications, credit card issuers look at applicants’ cibil score for home loan as one of the most important variables when deciding whether or not to approve them for credit cards. Consequently, individuals who have good credit ratings have a greater likelihood of having their applications for credit cards granted.

In addition to this, a high sbi cibil score can also help one increase their credit limit, provided that they meet the requirements. Your ability to make purchases with your credit card will improve if your credit limit is raised; as a result, you will have a greater capacity to make large purchases whenever they are necessary or to deal with urgent financial matters.

Get access to loans that have already been pre-approved

Your cibil score for home loan is used by a number of different lenders and online financial markets to determine whether or not they would pre-approve you for a loan or credit card. These pre-approved offers for loans or credit cards can come with improved product characteristics, a reduced interest rate, and a more expedited processing time. Having these pre-approved offers in your possession can also assist you in providing a reasonable sense of the cost of availing yourself of credit and the loans for which you are eligible. It’s possible that this will provide you with the leverage you need to negotiate better loan terms with other lenders.

Higher likelihood of being eligible for balance transfers on loans

Lenders may frequently offer balance transfer options at interest rates that are cheaper in an effort to entice consumers who have already established relationships with other lenders. In this scenario, the previous lender will receive the remaining loan amount that is owed to them from the new lender, and the borrower will receive the benefit of reduced interest costs as a result of lower interest rates. There is also the possibility that the transferred loan could have a longer repayment term, which would lead to more affordable monthly instalments.

However, just like they would with new loan applications, lenders look at the borrowers’ credit scores before deciding whether or not to issue a balance transfer offer. When determining the interest rate that will be applied to a transferred loan, certain lenders may take into consideration the borrower’s sbi cibil score as well. Therefore, you should strive to keep your cibil score for home loan as high as possible so that you can improve your chances of qualifying for loan balance transfers with reduced interest costs and/or cheaper monthly payments.

Can reduce the fees associated with processing loans

Similar to how interest rates are determined, certain financial institutions have a practice of rewarding applicants with higher credit scores by exempting them from or lowering the applicable loan processing fees. In light of the fact that processing fees can amount to a sizeable sum, particularly in the case of large-scale loans, the elimination or reduction of these fees might result in a significant reduction in the overall cost of obtaining credit. It is extremely improbable that loan applicants with poor credit scores will be given special treatment like this.

So, now that you have a good understanding of the benefits of credit score, especially for taking a big step like a home loan, ensure to be credit ready before you apply for it or any other loan or credit facility. The more ready you are financial, the better the chances of getting a credit card or loan!

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