Imagine a school life where candidates even after securing 90% marks don’t get admission to the college they want. Imagine students securing 90 percentiles in AIEEE or CAT exam don’t find themselves in IITs or IIMs. The intense competition for scores makes them ineligible. Similarly, the financial life is also dictated to an extent by the credit score. It plays a critical role in helping us realise our dreams and ambitions. In this blog, we will discuss dreams and ambitions we usually look to achieve and how a credit score helps ensure the same. Let’s begin!
Dreams and Ambitions We Generally Have
The luxury of living in our house replete with wonderful architecture and ample space gives us joy hard to describe in words. Doing scuba diving, water sports and various adventure activities on the beautiful beaches around the world makes the traveller within us happy. The fat Indian wedding comprising Band, Baaja, Baraat goes into our memory lane forever. Seeing your kids studying in top colleges and universities is a dream you live each day as a caring parent.
The key to achieving all these and more depends on MONEY. The rising inflation and disproportionate income distribution among the Indians don’t allow many the hard cash needed to fulfil these life goals. So, all eyes remain on loans, which you get largely based on a credit score.
So, What is a Credit Score?
A credit score is a representation of the borrower you are. If you have already availed a loan or a credit card, you must have been assigned a credit score from credit bureaus — CIBIL, Experian, Equifax and CRIF High Mark.
The highest credit score you can achieve is 900 based on a superlative repayment record boosted by no delay in loan or credit card dues, superb credit utilisation ratio and impeccable debt management skills. Lenders do a credit score check online the moment you apply for a loan or credit card online.
So, How Does a Credit Score Impact Personal Loan Applications?
A lot. A personal loan is an unsecured debt for which lenders don’t acquire any assets from borrowers. The extent of credit risk is high. That’s why lenders want to be assured of your credit history before disbursing you a personal loan. For smooth approval, it’s important to have a credit score of more than 700. Scores above 750 will likely allow you to grab exciting personal loan offers decked with lower interest rates.
What Can You Do with a Personal Loan?
So many things — Wedding, Child Education, Home Renovation, Travel and Emergency Needs, etc. It’s a loan banks and non-banking finance companies (NBFCs) disburse to individuals for any purpose for upto five years at interest rates ranging from 10–30% per annum based on their credit history. You can pay the loan EMIs on time to improve your credit score. Save the EMI amount diligently from your income every month to ensure it
The Impact of Credit Scores on Your Credit Card Application
Like a personal loan, a credit card is also an unsecured debt that lenders offer to individuals with a good credit score. Here also, individuals must have a credit score of more than 700 for approval. Scores over 750 will likely help you grab lifetime free credit cards offering a plethora of discounts, cashback and reward points on usage.
The Luxury of Having a Credit Card
Are you an avid traveller? You will love the multiple complimentary lounge access provided by credit cards at domestic and international airports. Do you love shopping for clothes, mobile phones, gift items and alike online and at merchant establishments? Love to dine outside? You will likely be greeted with discounts, cashback and reward points on all these spends.
You can redeem the reward points by shopping for an eligible list of products as shown on the rewards catalogue through net banking or other banking channels.
A Word of Caution
Don’t spend more than you can afford to pay. Credit card spending will attract a bill that you need to pay on or before the due date for a spotless credit score. And please, don’t fall prey to the minimum due payment.
Paying the minimum due amount, which constitutes only 5% of the outstanding credit card balance in a billing cycle, will only mount your debt. Although it may not impact your credit score much, doing so will pile your debt at an astounding interest rate of 30–40% per annum.
Why pay interest on a credit card when you can avoid it by paying the entire bill amount on time? Be wise while spending to keep your credit card bill to an extent you can pay on time without any discomfort.
Decoding the Impact of Credit Score on a Home Loan
The luxury of living in your dream home depends on a home loan. While a credit score does not play a part in home loan approval, it does play an important part in grabbing lower home loan interest rates.
Wrapping Up
If you have any running loans or credit card dues, pay them on time to boost your credit score. Hard work put in today will reward you later with an exciting range of loans to fulfil your life goals. At zarooribaathai.in, we offer plausible financial solutions backed by our research and insights. Visit our website to gain all that and more.
