If you are planning to raise a loan – secured or personal – one of the first things that you must do is to find your credit score. This is a three-digit number that reflects your creditworthiness i.e., your ability to repay a loan that you took. Higher the credit score, better it is for a borrower. And lower the credit score, the more difficult it becomes for a borrower to raise a loan.
What if your credit score is exceptionally high – say 700 or higher? In such a scenario, you are likely to be in a very comfortable position to negotiate a good deal with a bank. The lender may agree to offer loan at a lower interest rate
6 Key advantages of having a good credit score
I. Low interest rates on loans: Banks typically see you as low-risk. So you are more likely to be given loan – personal, home or car – at a lower interest rates. A different of even 1 percent can help you save considerable amount of money.
II. Low charges on processing: Since your score is high, you are in a better position to bargain for a lower fees or charges with lenders.
III. Easy loan approvals: High credit scores raises the possibility of quick and hassle-free approvals for loans and credit cards, usually with minimal documentation.
IV. High credit limit: You may be given a higher credit card limits or larger loan amounts, since lenders have a faith in your repayment capacity.
V. Pre-approved loans: Banks may even give you pre-approved personal loans or instant overdraft facilities even with little or minimal documentation.
VI. Credit card offers: It is likely to get access to premium credit cards with better rewards, cashback, lounge access, and other perks.
Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.