Impact of a Good CIBIL Score on Two Wheeler LoanApril 1, 2022
Remember the good, golden days of school, where numbers used to reflect your performance during the academic year. Numbers play a significant role in decision-making. If you apply for a two-wheeler loan, will a bank provide you with the finance? The lender does not know you. Here CIBIL score comes into play. Simply stating, CIBIL is your financial character displayed through numbers. Here are a few facts to help you know how CIBIL impacts your two-wheeler loan.
What is CIBIL?
The Credit Information Bureau India Limited is an organisation that retains precious information relating to the credit worthiness of every individual who has taken a loan or credit card. On a periodic basis, the banking partners provide the information to the bureau to build the credit profile.
Any lender may check your credit worthiness in a few clicks. Bankers hold public money, and hence, CIBIL helps to increase the transparency in the lending process to the public. Credit worthiness is now a public affair. CIBIL has helped many lenders to save on providing bad loans.
How does a good CIBIL score impact your two-wheeler loan?
Two-wheeler interest rates become cheaper for a person with a higher CIBIL score. The most significant benefit you would get is a lower interest rate for your two-wheeler loan.
Lenders may offer more flexibility in the tenure of a loan based on your higher CIBIL score. The flexible term helps you choose and switch the payments as per your choice. It further allows you to plan better.
With lower two-wheeler loan interest rates, the pain of your monthly outgo reduces. Even a 0.25% lowering of interest rate may significantly affect your EMI. You may check your repaying capacity using the two-wheeler loan EMI calculator.
Lenders provide more credit card offers to those with a higher credit score. Since repayment assurance is already established through the score, the lender tries to grab your credit profile more. This would benefit you to enjoy credit-linked offers such as huge discounts, cashback and many more.
Loan approval takes time if the lender is still evaluating your credit profile. However, getting a two-wheeler loan may become easier if you have a good score.
How to obtain an ideal CIBIL Score for a two-wheeler loan?
Generally, a credit score of 750 or above is considered trustworthy. Bankers will flood your SMS box with loads of offers and discounts. However, if you are facing through a bad CIBIL score, here are some quick tips:
- Reduce usage of your credit cards to 30% of the credit limit. Exhausting the credit limit shows you as a credit hungry person. Control your expense buds for a few months.
- Do not delay paying your credit card bill. However, if you have financial crunches, at least pay the minimum bill amount. It will help you keep out of bad credit figures and rest you should manage to pay the balance bill amount as soon as possible.
- Missing the payments for any debt or credit card loan is the worst financial mistake. It displays your complete inability to honour the liabilities on time.
- If a bank rejects you for a credit card or a loan, avoid reapplying in the same bank. Watch your credit score first, and then act accordingly. Avoid going for repeated credit applications.
- Check your repaying capacity using the two-wheeler loan EMI calculator. Choose the loan amount you can honour easily and start re-building the profile slowly and steadily.
CIBIL is the financial character that helps financial institutions decide on your eligibility for a loan. Hence, it is also considered the primary criterion for granting a two-wheeler loan. It may happen that your economic status may have improved, but the credit score is still displaying a bad profile. Take a pause, apply for smaller loans that can be easily approved and rebuild your profile.