When you are young, then money isn’t something that you have to worry about too much. This is because you are being taken care of by your parents, and you know that whatever you need, they will be able to provide it for you. However, as you enter adulthood, personal finance becomes important. You have to find work for making a living, and ways to save money. Most importantly, your CIBIL score becomes important too. But why is that? To understand that, you must first learn what cibil score actually is.
CIBIL score is a numerical representation of your creditworthiness. In other words, it shows how “worthy” you are of receiving credit.
CIBIL Score ranges between 300 and 900 can be found in the CIBIL report that’s provided by credit rating agency CIBIL (Credit Information Bureau of India Limited).
As you can imagine, the higher is your CIBIL score, the higher is your creditworthiness and vice versa. For most banks, anything above 700-750 is good. This brings us to the next question:
Your cibil report is one of the most important financial documents that you will use in your life. This is because it contains the details of your bank accounts, loans, credit repayment history, and of course- credit score.
If you need a personal loan, home loan, credit card, or even a new job, your credit score may play a huge role in that. In other words, if you want to feel financially secure and live a comfortable life, then it’s really important that you take care of your CIBIL score.
The following are some of the biggest reasons why a bad CIBIL score can pose all kinds of challenges in your life:
It’s not easy to get a loan when your credit report doesn’t look good. If there are instances of late payments, high credit utilization, and frequent loan inquiries, etc. all of which lead to a poor score, then it can become difficult for you to get a loan from any lender. This is because all banks check the credit reports of the loan applicants before approving loans. If there is a low credit score, then that may serve as a big red flag.
Those who have a bad CIBIL score tend to get the worst interest rates for loans and credit cards, if they get them in the first place that is. In other words, even if you do get a loan, repayment can become a nightmare with massive EMIs and long tenures. Even the repayment terms can be changed by the lender which may pose other difficulties.
A bad score isn’t good for your mental health too. Think about it, when you know that you don’t have a good score, you can’t have peace of mind. You will be rejected by several lenders when you need loans. Even when you get loans, you will have huge EMIs to pay. All of this can take a toll on your wellbeing and hurt morale.
Many of the top organizations, especially those in the banking and financial sector check the credit reports of the job applicants. So, if your score isn’t up to the mark, it’s possible that you may lose some of the best job opportunities in your life even if you are academically qualified.
As you can see, your credit score will play an important role in various stages of your life. So, make sure that you take responsibility for the same. You can start by checking your report as that can tell you where you stand today. After that, you can take appropriate steps to increase your score. For instance, you can try lowering your credit utilization, paying your credit card bills on time, checking your credit report for mistakes and discrepancies, etc. If you are not confident about yourself, then you can also consider talking to an expert who can guide you. Good luck!