The odds of getting approved for a loan are great if you have a high credit score. You probably know this already. Credit scores play a pivotal role in turning one’s credit aspirations into reality. It means if one has a good score then one can easily convert one’s dream of being financed into a reality. However, at the same time someone who has a deplorable credit past would find it difficult to materialize their dream of taking a loan.
Having said that, let’s highlight that there is more to credit scores than just helping you qualify for credit. It can help you save a lot of money as it puts you in a stronger position to bargain with the lending institution. Let us take an example of two men who had the exact same background, same level of education, similar job, matching income figure but one brother had a CIBIL score of 775 while the other had a CIBIL score of 656. Let us see how things shaped up for each of them.
A Tale of Two Bros
Neel & Gagan were a competitive lot since early childhood. But both of them had different ideologies and temperaments. While Neel was conscientious and practical in nature, Gagan was quite the opposite. He was carefree and a fantasizer. This behavior was captured well in their credit scores.
Neel had crafted his own score through focused efforts and could boast of having a score of 775. However, Gagan, who was nonchalant about his credit score, had a downbeat score of 656. Simultaneously, both had applied for a Loan on Property with Bank for 50 lakhs for 30 years. Both were approved for the loan but the terms on their loan were poles apart. Owing to this their future was different too.
Recently banks switched from base rate pricing for home loans to MCLR based pricing. This bumped the home loan interest rates by several basis points. Bank is currently offering the lowest rate of interest at 8.35%. But there is a catch.
Those who have a credit score of 760 and above only they are eligible to take advantage of this low score. For those having a below par score may have to face a charge as a high as 9.35%.
Initially, the spread of 100 basis points may not sound too significant but over a period of 30 years it can help you save lakhs of rupees. Remember, every basis point counts.