A high credit score helps to get quick approval for loans and other credit instruments. It’s important to have a good credit history for a high CIBIL score.
Becoming debt-free from any loan or credit card dues means you are free from the extra burden of paying EMIs or credit card bills every month. While repaying your loans brings financial security, your credit score also improves.
It’s important to maintain a good credit score to avail financial services conveniently and to get approval for credit instruments. Credit score can be enhanced by paying off the dues at regular intervals.
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The Cibil score or the credit score is a 3-digit number that reflects your credit rating and history. It ranges from 300 to 900 and a higher Cibil score is always desirable.
As a debt-free financial record along with a high Cibil score indicates a person’s responsible credit behaviour, scroll down to learn about the benefits of having a good Cibil score.
Benefits of being debt-free and a good Cibil score
1. Having a debt-free financial record along with a high Cibil score shows an individual’s responsible credit behaviour along with his repayment track record. This helps in the quick approval of loans as lenders perceive such borrowers as being lower-risk defaulters. Thus the chance of the loans getting approved increases with a high Cibil score.
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2. Those having a good credit score and a debt-free background can get new offers from lenders at lower interest rates in the case of personal loans, home loans or credit cards.
3. Having a high Cibil score also increases the chances of borrowers accessing pre-approved loans and credit card offers. Also, borrowers can get easy access to premium credit cards with better rewards.
4. A high credit score also increases the chances of getting approval for higher loan amounts and also an increase in credit card limits.
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Tips for maintaining a good credit score
Considering the mentioned benefits of maintaining a good credit score, a few things need to be kept in mind to achieve this target.
1. You need to pay your bills and debts on time as it may impact your credit score.
2. Focus on not using the total 100 per cent of your available limit on credit cards and instead try to manage your finances responsibly.
3. One should avoid closing their old credit accounts as using them on an occasional basis helps to keep their credit utilisation ratio low, thus positively influencing their Cibil Score.
4. Don’t frequently apply for loans or use credit instruments. This will reduce your credit score.
