What Is a Good Credit Score? Benefits of Having a Good Credit Score

According to a TransUnion CIBIL report, credit self-monitoring among Indians has seen a remarkable rise. By March 2024, approximately 119 million Indians had monitored their CIBIL scores, representing a 51% year-on-year increase. This trend highlights a growing awareness of the importance of maintaining a good credit score.

Your credit score is a crucial consideration for lenders when assessing your creditworthiness, whether you’re applying for a personal loan or making a significant financial investment, such as buying a property. A good credit score can help you access loans with competitive interest rates, secure credit cards with premium benefits, and more.

Let’s explore what defines a good credit score, why it matters, and the financial advantages it brings.

What Is a Good Credit Score?

A credit score is a numerical representation of your creditworthiness, used by lenders to assess the risk of lending to you. In India, a good credit score typically ranges between 700 and 749, while scores of 750 and above are considered excellent. These scores reflect a strong financial track record, shaped by factors such as timely repayments, optimal credit utilisation, and the age of your credit accounts.

Scores below 700 indicate higher borrowing risk, which may lead to stricter loan terms or even rejections. On the other hand, scores above 750 significantly improve your chances of securing loans at favourable terms, although the specific thresholds depend on the loan type and lender policies.

Regular monitoring is one of the important steps in improving your credit score. Average credit score statistics indicate that 46% of individuals who consistently tracked their credit scores noticed improvements within six months . 

Now that we have explained credit score ranges, let’s explore the impact of good credit scores on loans.

Good Credit Score Benefits

1. Enjoy Low Interest Rates on Loans

A good credit score increases your chances of accessing loans with lower interest rates, reducing the overall borrowing cost. Lenders generally view individuals with high credit scores as low-risk borrowers due to their demonstrated reliability and lower likelihood of default.

2. Improve Your Chances of Loan Approval

A high credit score increases the chances of your loan applications being approved with minimal hassle. Lenders prefer borrowers with a strong repayment history and responsible credit behaviour, as it reduces their risk. When evaluating loan applications, your credit score is a critical factor. A score above 750 signals financial stability, often expediting approval processes.

3. Get Higher Loan Limits

A good credit score can lead to favourable loan terms, including higher loan amounts. This provides you with financial flexibility for major investments and expenses. Lenders are more confident in lending larger sums to individuals with a proven track record of responsible credit management. A strong credit score highlights your ability to handle financial commitments effectively, resulting in increased credit limits or loan amounts tailored to your needs.

4. Get Desired Credit Card(s)

A strong credit score improves your chances of qualifying for high-limit credit cards with exclusive benefits. Credit card issuers favour applicants with excellent credit scores for premium cards offering perks like cashback, travel rewards, and other privileges.

Important Note: While a good credit score enhances your chances of securing loans or credit cards with favourable terms, other factors such as income, work experience, and existing debts also influence loan eligibility, approval, interest rates, and credit limits.

Conclusion

A good credit score can ease your path to valuable financial opportunities such as low-interest loans, higher borrowing limits, and exclusive credit card benefits. Regular monitoring and responsible credit management are essential for maintaining a strong credit score. By making timely payments, keeping credit utilisation below 30% of the available limit, and avoiding multiple loan applications, you can build and sustain a healthy credit profile.

Maintaining a credit score of 750 or higher? Capitalise on your strong credit profile by applying for personal loans of up to INR 30 lakhs* at SMFG India Credit. With attractive interest rates starting from just 13%* per annum, these loans can be tailored to a variety of needs, including debt consolidation, higher education, business expansion, or weddings. Check your eligibility and apply online today!