As you make another major purchase on your credit card, getting closer to maxing it out, you may be unaware of the negative impact this action will have on your CIBIL Score. The same is true for making the occasional late payment on your utility bills or auto loans. Debt that is not paid off on time or in whole can have a significant negative impact on your CIBIL Score. A low CIBIL Score might have far-reaching repercussions than you may realise.
So, what's the big deal about a poor CIBIL Score? Many organisations, from banks to corporations to insurance agencies, now check your credit history before making a decision. You may find that your poor CIBIL Score prevents you from being approved for a loan, finding work, or even finding a place to live. However, you can download the GroMo mobile app to check your CIBIL Score online. Simply download the GroMo app from the Google Play Store or App Store and register to become a GroMo Partner.
After which, you can sell financial products to potential customers and earn commissions. Also, you can conduct a free CIBIL Score check online to get a clear picture of your credit health before applying for any new loan or credit card.
Effects Of Low CIBIL Score
There are multiple consequences that you might have to face because of your low CIBIL Score. Here is a list of such negative repercussions:
Loan Applications Might Get Rejected
Lenders and creditors view consumers with low credit as high risk, therefore they will be less likely to offer you the money you require. Whether you are providing a mortgage to obtain a home or a loan to finance a new automobile, your loan applications may be rejected directly if you have a low CIBIL Score. Whenever you apply for a new loan with a low CIBIL Score, there are chances that your application will get rejected. Having multiple rejections can also have an impact on your CIBIL Score. Moreover, the banks might consider your application if you have a slightly lower score than the eligibility criterion. However, if you have a poor CIBIL Score, then the banks would directly reject your loan application.
Higher Interest Rates
This can happen if you have a slightly lower CIBIL Score. Moreover, if you are accepted for a loan but have a low CIBIL Score, then you will almost certainly be saddled with a very high interest rate. Banks approve loan applications with a low CIBIL Score but increase the interest rate. Because banks consider individuals with poor scores to be risky applicants, they will make you pay for it by adding a high interest rate to your loan. The greater your loan's interest rate, the more you'll pay toward interest rather than principal during the loan tenure.
Higher Insurance Premiums
Even insurance firms run credit checks on their customers. They believe that lower credit scores are linked to an increase in the number of claims submitted. This assumption leads insurance companies to investigate a person's credit history. If they discover that you have a low CIBIL Score, you will almost certainly be charged a higher rate, regardless of how many claims you have made. Therefore, it is advisable to have a high CIBIL Score before buying any new insurance to get lower premium amounts. Also, if you have a low CIBIL Score, then you should first follow the tips on how to improve your CIBIL Score and then buy insurance policies to get lower premiums.
Lower Loan Amount Approvals
Even if you get approved for a loan with low CIBIL Score, it is most likely that your loan amount would be reduced by the bank. Banks consider individuals with a low CIBIL Score as risky applicants and therefore are less likely to approve a loan application. However, if they approve a loan application they would have either decreased the loan amount, increased the interest rate, or in some cases both. Therefore, it is advisable to check CIBIL Score online before applying for a loan to get approval on your loan application with your desired loan amount.
Less Credit Card Rewards
Credit cards that offer high rewards usually have an eligibility criterion that requires the applicant to have a high CIBIL Score. Therefore, applying for a credit card with low CIBIL Score would make it difficult to obtain the best credit cards and you might end up losing the benefits and rewards that come along with the best credit cards in India. However, applying for a credit card with a high CIBIL Score can make you eligible for instant approvals. Banks even have pre-approved credit cards for individuals that have a high CIBIL Score.
These are some of the consequences of having a low CIBIL Score. It is advisable to not apply for loan or credit cards with a poor score in order to avoid rejection. If you have a low CIBIL Score, then you can first use the tips on how to improve your CIBIL Score and build up your score and creditworthiness. Then you can apply for loans and credit cards and get instant approvals. You can also check your CIBIL Score online using the GroMo mobile app.
GroMo is the leading fintech app in India that enables its users to earn money by selling financial products online to potential customers. All you need to do is to download the GroMo app on your smartphone and register using your bank and KYC details. After which you can select from a wide range of financial products and refer them to potential customers. You will receive a commission for every successful conversion. So what are you waiting for? Download the GroMo app Today!
What are the disadvantages of low CIBIL Score?
Loan rejections, high interest rates, higher insurance premiums, difficulty in obtaining credit cards are a few of the disadvantages that come along with a low CIBIL Score.
Can I get job if my CIBIL score is low?
It is possible that you might face difficulties in getting a job with a low CIBIL Score. Companies usually don’t hire individuals who are struggling with their own finances as it can hamper their work performance.
How can I clear my low CIBIL score?
There are numerous ways by which you can improve your CIBIL Score. Few of them are:
- Pay your debts on time
- Maintain healthy credit mix
- Have low credit utilisation ratio
- Keep a track of your credit report
Can CIBIL score be improved immediately?
CIBIL Score usually takes some time to improve. However, if you are consistent with your practices, then you surely can improve your CIBIL Score.
Do bank jobs check your credit score?
Yes, banks perform background checks on applicants which also involves checking the CIBIL Score of the applicant. It is done to ensure the creditworthiness of the applicant as a bank job involves dealing with financial instruments and sensitive information all day.