5 Reasons Why You Must Work Hard For A High CIBIL Score
Most Indians bother only about two kinds of score: the cricket team’s score and the election score. But there’s another score you would do well to keep an eye upon—your CIBIL score. And it is directly and completely in your control.
What is CIBIL Score?
Your CIBIL score is a 3-digit number, ranging from 300 to 900 and representing your credit worthiness. The closer your score is to the maximum, the better you are rated by banks and lenders. For most credit cards, you need a score of 750 or thereabout. The cut-off mark for secured loans, however, is lower, but keep in mind that a lower score means a higher interest rate.
Why care about your CIBIL score?
A high CIBIL score means more financial opportunities and better opportunities in general. A below par score, on the other hand, is much like the proverbial monkey on the back. Things won’t improve on many fronts if you don’t kick off the monkey from your life.
Let’s see why you must care for your CIBIL score:
- You won’t get a home loan
Your dream of owning your own home may remain a dream if you need a home loan (and who doesn’t?) but have a poor CIBIL score.
CIBIL score is a very important factor that banks take into account when deciding on a loan application. It is also a factor in approved applications. Banks calculate the interest rate on basis of your CIIBL score, among other things.
So even if you win a home loan, with a below par CIBIL score, you will end up paying a higher interest. Over a period of time, this will translate into paying a lot more than you would have paid if your score had been close to 750.
- Your credit card application won’t be approved
Want to get a new credit card? Well, you may want it as badly as you want but are not going to get one if the score is below 700.
- You may not get other loans
Home loan and credit card aside, banks and financial companies also check CIBIL score when evaluating applications for other loans, like personal loan or auto loan. A poor score may cause your application to be rejected or may mean getting a lower loan amount and paying a higher interest on the loan amount.
- Job opportunities may reduce
Increasing number of employers are now checking candidates’ CIBIL report and score during the background check-up process. An unhealthy CIBIL report can affect your candidacy as employers see it as a proof of poor financial discipline. You may be passed over for someone with equally good or marginally less impressive credentials but an impeccable credit record.
- Getting a house on rent may prove difficult in future
Checking a tenant’s credit history is part of the tenant vetting process abroad. In India, at present at least, this is not a norm but rather an exception. However, experts believe that in future more and more apartment owners in posh localities in metropolitan cities are going to ask potential tenants to furnish a copy of their CIBIL score. This is because people with poor credit repayment history are more likely to miss payment.