Credit Score Benefits: Apart from increasing the credit card limit, a better credit score is required to avail many other facilities. It is also known as CIBIL Score, which is a three digit number. It ranges between 300 to 900. This shows how the customer has managed the personal loan, home loan, auto loan, overdraft so far, whether the loan has been paid on time or not, whether you have missed paying the due amount on time. All things are required to build a credit card score.
Many benefits of better credit score
Generally a score of 750 or more is considered better. The bank considers a customer with a low score as a risk. The bank feels that it can default at any time. In such situations, sometimes the bank also reduces the credit card limit. There are many benefits of a better credit score.
Those with higher credit scores sometimes get facilities like lower interest rates, more options, choosing the preferred loan repayment period etc. Many times insurance companies also determine the premium on the basis of credit score.
A high credit score also helps in setting the premium for auto, health or other insurance policies at a lower rate. This is because insurance companies offer discounts on premiums to people with higher scores considering them less risky. Sometimes such customers get a discount of up to 15 percent on the policy.
Keep in mind the utilization ratio
If your credit score is good, your chances of getting a loan easily are also higher. They also get rebate on interest, due to which a lot of money is also saved. For example, State Bank of India (SBI) offers home loan facilities with concessions on effective interest rates that vary depending on the CIBIL score of the customer. In such a situation, always try to increase your credit score.
For this, repay the loan on time, do not use too much of the limit of your card, that is, keep in mind the utilization ratio. Use only 30 percent of the card limit. Using 70 or more percent puts you in the risky zone. By keeping these small things in mind, you can increase your credit score.
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