Generally, everyone can manage their expenses but sometimes we require extra funds to fulfill certain responsibilities or dreams of ours like buying your dream house, foreign travel on vacation, funding your child’s higher education, buying your dream car, etc. etc.
However, most of us have little option but to take credit or loan to meet our life goals, especially the ones involving a huge investment like buying a car or home. To make the borrowing process more favorable and simpler, it is important to have a good credit score rather a good credit rating history.
Advantages of a Good Credit Score
A better Credit score helps financial institutions to recognize the risk involved in lending money to an applicant and gives a fair assessment of the borrower’s creditability. In simple words, a high or good credit score leads to faster processing and approval of loans.
A credit score is an individual’s assessment that determines whether you are eligible to get a loan from a bank and capable of paying it on time, as per the loan agreement.
Needless to say, it is based upon a good history of paying loans on time in the past. It influences the bank’s decision of approving your loan application at a considerate or special rate of interest with a longer duration.
Maximum Borrowing/Loan limit
With a high credit rating, you will be seen as low or no risk customer and banks may offer you a maximum loan with special offers attached to it.
When safety to pay your loans is assured, banks tend you to offer value-added services like a top-up loan on an existing loan or new loans at a better rate of interest from time to time as a good credit score is equitant to an assurance that loan will be paid back with interest on time.
Faster Credit Card Approvals
People with poor credit history typically get rejected when they apply for a new credit card. On the other hand, have an excellent credit score maximizes your chances of being approved for a new card with better spending limits.
In short, you can apply for a credit card with confidence and the issuing authorities will be glad to issue you one.
More Negotiating Power
A good credit score gives you the leverage to negotiate a lower interest rate on a credit card loan, a new bank loan or an annual fee waiver while applying for a new credit card.
If you need more bargaining power, you can take advantage of your credit score plus you keep getting other attractive offers from other companies based on your credit rating.
Certificate of Trust
Nowadays, many financial institutions, insurance companies, and landlords are using credit scores to screen prospective buyers and tenants.
A good credit score means that you may be waived a security deposit when you buy a utility service or telephone connection or a membership.
Make you feel confident and Motivated
Last but not least, managing a good credit score makes you feel more confident, happy and motivated to be on the right track and keep building a strong self-image.
No bank would like to give money to a defaulter or risky customer. With your credit score evaluation, they get an idea about your creditworthiness and by doing so; they can provide you loans on easy terms and conditions, leading to a win-win situation for both the lender and the borrower.