Lisha was known far and wide for her savvy financial sense and a keen eye for investments. Her journey to attain financial stability began with a simple question – “What is CIBIL score?”
What is CIBIL score?
One sunny morning, Lisha decided to meet her friend Raj, a banker, who was well-versed in personal finance. Over a cup of steaming chai, she posed her question, “Raj, what is this CIBIL score that everyone keeps talking about?”
Raj leaned forward and explained, “Well, Lisha, the CIBIL score is a three-digit number ranging from 300 to 900. It reflects your creditworthiness, summarising your credit history. TransUnion CIBIL, formerly known as Credit Information Bureau (India) Limited, is the oldest and most trusted credit bureau in India, responsible for maintaining credit records.”
Intrigued, Lisha prodded further, “Why is it so important?”
Importance of TransUnion CIBIL
Raj smiled and shared a few stories to illustrate the importance of a good CIBIL score.
Example 1: Home sweet home
He began with the tale of Rahul and Anjali, a young couple with dreams of buying their own home. Rahul’s impeccable CIBIL score of 800 opened doors to favourable home loan offers. They secured a loan with a lower interest rate, translating into significant savings over the years. An excellent CIBIL score, Lisha learned, can be the key to realising homeownership dreams.
Example 2: Business aspirations
Raj then narrated the story of Shikha, an aspiring entrepreneur. With her CIBIL score of 750, she easily obtained a business loan, which helped her kickstart her dream venture. A good CIBIL score can be a stepping stone to turning business ideas into reality.
Benefits of having a good CIBIL score
Intrigued by these stories, Lisha decided to dig deeper. She uncovered a treasure trove of benefits that a good CIBIL score can bring –
Lower interest rates
A good CIBIL score often leads to lower interest rates, reducing the overall cost of borrowing. Lenders view borrowers with high scores as less risky, so they offer lower interest rates as an incentive. This means you pay less interest over the life of your loans, saving you a significant amount of money.
Higher credit card limits
Banks are more generous with credit card limits for those with good scores. A high CIBIL score indicates your ability to manage credit responsibly. Consequently, credit card issuers are more inclined to offer you higher credit limits, giving you greater financial flexibility.
Easy loan approvals
Banks and lenders trust individuals with high CIBIL scores for loan approvals. When you have a good score, it signifies that you have a history of responsible credit management. Lenders are more confident in your ability to repay loans, making the approval process smoother and faster.
Faster loan processing
Quick approval and processing are possible due to a positive credit history. With a high CIBIL score, your creditworthiness is evident from the start, reducing the need for extensive documentation and verification. This expedites the loan approval process.
Favourable employment
Some employers consider CIBIL scores during the hiring process. In industries where financial responsibility is crucial (e.g., finance, banking), a good CIBIL score can make you a more attractive candidate, potentially leading to better job opportunities and higher salaries.
Negotiating power
A strong CIBIL score gives you leverage to negotiate better terms. Whether you’re applying for a loan or negotiating interest rates, a high score makes lenders more willing to accommodate your requests, ultimately saving you money and enhancing your financial position.
Financial security
High scores indicate financial stability. A good CIBIL score reflects your consistent ability to manage your finances, reducing the risk of financial setbacks. This security allows you to plan for the future with confidence.
Access to premium credit cards
Premium card offerings become accessible. With a high CIBIL score, you qualify for premium credit cards that offer exclusive rewards, benefits, and perks, such as airport lounge access and cashback offer.
Attractive EMI options
Better scores often come with flexible EMI options. Lenders may offer you the flexibility to choose your EMI amount and repayment tenure, making it easier to manage your monthly finances and avoid overstretching your budget.
Reduced stress
Financial worries are fewer with a strong CIBIL score. You’ll experience less stress about loan approvals, high-interest rates, and financial emergencies because your good score opens various financial opportunities.
Balance transfer options
Enjoy balance transfer offers with favorable terms. Lenders may provide balance transfer options at lower interest rates, helping you consolidate and manage your debt more effectively.
Lower risk perception
Lenders perceive you as less risky, enhancing trust. Your high CIBIL score demonstrates your creditworthiness, making lenders more confident in your ability to repay, and increasing your chances of getting approved for larger loans.
Better financial planning
High scores encourage responsible financial behaviour. Maintaining a good score requires responsible credit management, which encourages disciplined financial planning and budgeting.
Emergency funds
Quick access to personal loans during emergencies. With a good CIBIL score, you can secure personal loans swiftly when unexpected financial crises arise, ensuring you have the funds you need when you need them most.
Enhanced credit portfolio
A strong credit history can diversify your credit portfolio. With a good CIBIL score, you can explore different types of credit, such as mortgages, auto loans, and credit cards, which can positively impact your overall credit profile.
Investment opportunities
Opens doors to investment opportunities with lower interest rates. With a good CIBIL score, you can access investment loans at favourable terms, potentially increasing your returns on investment.
Financial literacy
Managing credit well is a valuable financial skill. Maintaining a good CIBIL score necessitates understanding credit and finances, which fosters financial literacy and responsible financial decision-making.
As Lisha absorbed this wealth of information, she realised that her financial journey had taken a crucial turn. With the knowledge of what a CIBIL score is and the importance of TransUnion CIBIL, she started a mission to strengthen her own score.
She knew that her path to prosperity was now clearer than ever before, thanks to the three-digit number known as the CIBIL score. And so, with determination, Lisha’s financial journey continued.
