In a world where credit can help you meet your financial goals or cater to a cash crunch in an emergency, it is important to know that you have access to credit facilities when you need it the most. And this is particularly true for today’s Gen Z and millennials, who are much more open to embracing credit cards and loans than their parents were. These are the credit-seekers, the credit-over-cash game-changers, the advocates for access to credit at their fingertips.
Lenders’ Wariness about Consumer Behavior
However, lenders and banks are cautious when it comes to approving credit card applications and different types of loans. After all, they would be lending in the hope that the applicant will fulfil his end of the loan agreement and repay on time, every single time. In line with this expectation, they are inclined to onboard customers with a proven track record of making timely payments, as established in their credit profile and reflected in a high CIBIL Score.
This makes your CIBIL Score and Report one of the key influencers in the credit underwriting and approval process.
Key Advantages of a Positive Credit Profile
In their pursuit for credit-conscious consumers, lenders are increasingly rewarding consumers with a positive credit profile and high CIBIL Score. Here’s how:
Faster loan approvals: Your CIBIL Score is a reflection of your credit profile and past repayment behavior, and a good indicator of your credit-worthiness. The higher your CIBIL Score, the more credit-worthy you are — and this is exactly what lenders are looking for. It helps them make quicker credit decisions so that you can get faster loan approvals.
- Competitive rates of interest and reduced processing charges: Credit-savvy consumers can avail a plethora of loans at competitive rates of interest or reduced processing charges. Wise consumers are aware that the slightest reduction in the rates of interest across large-ticket loans can lead to significant savings, and they will strive to build and maintain a high Score to use this to their advantage.
- Pre-approved loans: Lenders are forthcoming about their loan offers and eligibility criteria, now offering consumers a variety of pre-approved loans based on their CIBIL Scores. These come in exciting packages and the higher the CIBIL Score, the more offers or better benefits you may be eligible for. Most importantly, these pre-approved loans can help you achieve your financial goals earlier than you may have expected.
- Advantage in negotiations: When evaluating loan offers, a high CIBIL Score can give consumers an advantage in negotiating lower rates of interest, the loan tenure and other additional charges. However, while negotiating with lenders, please be cautious about applying for new credit frequently or to multiple lenders within a short period of time as this may be mistaken for a sudden increase in credit appetite and not be viewed positively.
- Longer loan tenures: A higher score allows consumers to ask for loans with a longer tenure. A longer tenure can reduce your credit burden as loan repayments across a longer period of time also translates into smaller EMIs and lesser monthly credit burden. Depending on your stage of life and existing credit exposure, this can help you manage your expenses.
- Additional credit card benefits: Before approving a credit card application, lenders look at your EMI to income ratio to gauge your repayment capability and check your credit profile by reviewing your CIBIL Score and Report. A high CIBIL Score reiterates good credit behavior and will help them take key underwriting decisions such as setting a higher credit limit on your credit card, or offering reward programs like cashbacks. A high Score has a dual advantage of ensuring you have plastic money when you need it the most as well as delivering benefits (even cash-saving ones).
- Bonus Tip: Besides lenders, recruiters are also eager to attract candidates with a positive credit profile. This is because a high CIBIL Score and good credit habits stem from good behavior and can easily cascade into other aspects of the work profile too.
And this is why it is instrumental to showcase your credit-consciousness by building and maintaining a high CIBIL Score. If you are keen to avail of these credit opportunities, remember that your access to credit depends on your established credit profile and CIBIL Score. Here are some tips that can help you build a high CIBIL Score and maintain it, so that you are credit-conscious and loan-ready when the opportunity arises.
Over a period of time, you will be able to build and maintain a high CIBIL Score. Stay focused on your credit behavior and showcase good credit habits so that you are eligible for credit when you need it the most. Not only will this help you get access to credit, but may also help you get rewarded for your credit-conscious behavior.