My friend Jignesh recently applied for a business loan to SBI Bank. But as you know, it will take some time for approval. So, Jignesh was looking for another option. Jignesh has one plus point which is a good credit score. He got the instant pre-approved loan online with a 745+ credit score.
If you also have an excellent credit score, you will get pre-approved offers, credit cards & more. I think you understand why you should maintain a good credit score.
Now, we will talk about the benefits of a good credit score.
5 Benefits of a Good Credit Score
Your healthy credit score makes your life more easier. You can take different benefits such as low-interest loans, pre-approved offers, credit cards, etc. Let’s discuss about 5 benefits of a good credit score.
1. Pre-approved Loan
Nowadays, many banks provide pre-approved loan offers. If you maintain a healthy CIBIL score, you will get the pre-approved offer.
Without verification, you may be eligible for a loan and the documents process is lower. Some lenders do not require any documents. Many banks such as Axis, HDFC, L&T, Bajaj Finserv & Paytm provide pre-approved loans.
2. Get a Credit Card
Some time ago, I got a pre-approved credit card through SBI Bank. This is a pre-approved offer based on my credit score. So, if your minimum credit score is 740, you may also get the card.
Also, your credit limit may increase if you have a good credit score. Always use 30% of the credit limit to build the score. Let’s say you have a 1 lakh card limit. So, you should use 30% which is 30,000. With this simple trick, you can scale up your credit score.
3. Lower Interest Rate
A lower interest rate is one of the best benefits when you are taking a loan. Most times you have to pay a higher loan amount because of interest rate. With a good credit score, you can decrease loan interest.
The lower interest helps you to pay the lower EMI.
4. Increase Credit Limit
A good credit score may increase your credit limit. When my credit card was approved, the credit limit was 1 lakh. But now the credit limit is 2 lakh because of CIBIL Score.
5. Best Insurance Rate
Some people don’t know how to pay the lower car insurance. Insurance companies track your credit score all the time. If you have a higher credit risk, your car insurance amount will be higher.
With a good credit score, your car insurance amount will be cheaper. So, this is one of the profitable benefits of credit score.
Also Read: Best Credit Card for Higher Income Earners
How to Increase CIBIL Score
The small steps are enough to build a good credit score. Just follow the baby steps:
- Pay credit card bill on time
- Use 30% of your credit card limit
- Avoid applying for multiple loans
- Don’t settle the due loan amount
- Repay loan amount on time
What is exactly a good credit score?
Actually, there is not any specific number of good credit scores. But FICO divides the credit score into 3 digits amounts which start from 300 to 900. And the good credit score falls under this number. The 745 credit score is a good score.
What is the simple strategy of maintaining a good credit score?
Always pay your due loan amount & credit card bills on time. That way your credit score builds up timely.
How much credit score is enough for a pre-approved loan?
A good credit score which is 745+ is required for a pre-approved loan offer. Always you should check the loan offer through banking apps or online banking.