TransUnion CIBIL assigns CIBIL scores ranging from 300 to 900. A score of less than 650 is deemed low. A low Score has a variety of drawbacks, one of which is that your loan application may be rejected altogether. You may have to wait longer than usual, and additional documents may be required. You may be required to pay a significantly higher interest rate. A high score gives you numerous advantages, whilst a low score might cause you a lot of issues. When you apply for a loan at a bank or financial institution, lenders frequently look at your CIBIL score. Then, make a decision on the loan’s terms and conditions, as well as its interest rate. As a result, before applying for a loan or credit card, you should verify your credit score. Your CIBIL score even determines the loan amount you request.
The credit score is just a brief indication of your capacity to repay the bank. Banks evaluate your loan application based on your creditworthiness as well as other factors such as payback history, income, age, existing debts, and so on. A low score has a lot of disadvantages. The following are some of the disadvantages of having a poor credit score:
1. Loan Application Rejection
When you apply for a loan, your CIBIL Score is one of the first and most crucial factors reviewed. The additional requirements, such as your salary, previous debts, and employment status, vary from bank to bank. Your credit score, on the other hand, is a direct measure of your creditworthiness. It also indicates your likelihood of repaying the debt. As a result, no lender will give a loan to someone who has a poor credit history. As a result, if you have a bad credit score, your loan application will be denied.
2. Increased Interest Rates
While some banks may simply refuse to lend to you because of your negative credit, others may be willing to do so. They may agree to lend at a higher interest rate to compensate for the increased risk of lending to you.
3. Difficulties in Getting a Credit Card
With a low credit score, it is quite difficult to obtain a credit card because most credit card providers in India check your CIBIL score whenever you apply for a credit card. If you have a low credit score, credit card companies are more likely to reject your application. However, if your credit score is not too low, the firm may consider and accept your application. The permissible credit limit would not be that high. Credit card companies may charge a higher premium on your card in addition to the credit limit.
Some of the repercussions of a poor CIBIL score are shown above. Even if you are not aware of your credit score, a poor CIBIL score can harm you in a variety of ways. Your CIBIL score may also be low due to an inaccuracy in your credit report, and you may be unaware of the error. As a result, it is important to make a CIBIL score login in order to monitor both your credit record and your credit score. Regularly checking your credit score and report can make you aware if there are any errors in your credit report. These errors can lower your credit score and you might have to face some difficulties in obtaining a loan or a credit card. There are several websites where you may check your CIBIL score for free online. As a result, you should continually keep an eye on your credit score to avoid anomalies that could affect your CIBIL score. By avoiding these disadvantages, you will be able to gain the benefits of a high CIBIL score.