CIBIL or credit score is a key factor when it comes to availing credit approvals (especially loans). CIBIL (Credit Information Bureau of India Limited) is India’s first credit bureau that formulates the credit score based on a borrower’s credit history, which helps banks and lending institutions to evaluate the creditworthiness and repayment ability of a prospective borrower before approving loan applications.

The possibility of getting a credit or loan does not depend entirely on your CIBIL score, but if the credit score is high the process of approving the application becomes easier as your CIBIL score is your first impression for the lender.

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CIBIL or credit score is a 3-digit number (ranges between 300 and 900), calculated based on the details of prior loans or debts of the borrower by comparing three year credit history. CIBIL also considers factors like credit utilization ratio, loan servicing term number of outstanding loans and percentage of unsecured loans to calculate your credit score.

There are various benefits of having a good credit score. Access to best credit cards, quick loan/credit approvals and flexibility on loan interest rates are among the top perks of maintaining a high credit score. Here are 4 perks of having a good credit score, which are often overlooked:

Perk #1: Obtain a higher credit card limit

A higher CIBIL score shows the creditors that you can settle your bill on time, which creates a possibility where they can expand the spending limit of your credit card. Compromised credit history is likely to reduce your credit limit, which will lower your score. So, it is highly recommended that you maintain a healthy credit history/credit score to enjoy the benefits of a greater spending limit on your credit card.

Perk #2: Get a line of credit

Line of Credit is a credit instrument like a personal loan. But in a loan you borrow a lump sum amount, whereas, line of credit is an agreement between a bank/NBFC and the borrower where the lender is set to lend a maximum amount to you.

You can withdraw money as per requirement, until you reach the maximum limit. The biggest advantage of a line of credit is that the interest is not charged on the maximum amount. Interest is charged only on the borrowed amount. CIBIL score is the key criteria for getting a line of credit. Maintaining a good credit score helps you avail the benefits of line of credit.

Perk #3: Effortless housing

Be it buying a house or renting one, having a place to call home is one of the biggest dreams people have. Having a bad/low credit score is an obstruction that prevents people from living in their dream house. Banks and NBFCs do not tend to approve loans for applicants with a low or average credit score. Most lenders demand high credit score for sanctioning housing loans.

Low CIBIL score can not only stop you from purchasing a home; it can also obstruct leasing of an apartment. Most landlords are checking credit score to ensure timely payment of rent. Lower credit score could lead to denial of your rental application.

Perk #4: Job Applications

If you are applying for jobs that require handling finances or accessing confidential financial information, a potential employer is likely to ask you to share details regarding the credit history. This request is usually made to rule out red flags like bankruptcies and late/missing payments to assess you trustworthiness.

For such jobs, you need to be a financially responsible candidate, which is when you present as a trustworthy and dependable choice. The chances of showcasing trustworthiness and dependability are higher if you are maintaining a healthy credit history and high credit score.

In conclusion, a good CIBIL score or credit history creates more opportunities for you. Starting from helping you get the best loan terms and interest rates, to buying/renting a house or acquiring a position of credibility professionally.

(Gaurav Chopra is CEO & Founder, IndiaLends)