Maintaining a Good Credit Score can Save Money!!!

Do you know your credit score?

While a financially savvy person may be aware of the Credit Score, the awareness on how a good credit score can help in savings and building fortune is unknown to this smaller segment of Indian population. In general only a few people are aware about credit score and that it facilitates getting a loan so the awareness about it and the associated financial benefits are bound to be scarce.

First a Few Facts 

  • A good credit score is expected to smoothen and hasten your loan process.
  • No bank/lending institution advertises a low interest rate or any other advantage linked to a high credit score but a score is definitely a factor on interest getting charged.
  • Lower score shall result into a higher rate of interest and or rejection of loan.

Good Credit Score for loans

How a Good Credit Score helps you in saving Money: 

Save Processing Fees: When you apply for any home loan you have to pay the processing fee which is non-refundable. This can range from 0.25% to 1.5%. Thus if your loan by one bank or financial institution is rejected due to a bad credit score you will end up losing money; this has to be paid regardless of the loan being approved or rejected.

So for a Rs 30 lakh loan you could lose an amount ranging from Rs.7500 to 45000. Good credit score kicks in right from the beginning of application and starts saving money for you. 

Lower Rate If Interest Getting Charged: Flexibility of getting charged a lower interest rate is higher when it comes to loan rates so you can negotiate better rates. A higher credit score can get you a personal loan on lower rates. A lower rate of interest by just 1% can lead to huge savings.

Bargaining Power: A good credit score gives you the bargaining power. Not only It will be easier for you to get a loan, but with this negotiating chip in your hand, you could choose a lender that offers not only the best interest rates but also competitive processing/legal fee and pre-closure terms. All this can help you in saving considerable amounts of money. Banks may actually waive pre-closure penalty and processing fees for higher credit score.

Missed Opportunities: There might be times when you would like your auto loan or home loan to get processed speedily due to special car or home offer. Car dealers around festival times and at the end of year announce special discounts. In case you want to avail an opportunity like this you would definitely like the turnaround time for your loan processing to be less as these are limited period offers.

Developers often offer special inaugural discounts; if a home owner has placed his house for sale then he/she will also like the transaction to be carried out within a specified time frame. Under such conditions a speedy processing of your home loan will definitely come in handy. A good credit report is a sure shot way to a quick loan and in situations like above can help you save money. If you were to miss these opportunities because your loan got delayed as your credit score was not good it could mean a loss of tens of thousands. You may also be willing to buy that piece of jewelry or that last TV put up on same and looking at instant approval on your consumer loan. So the time on loan approval is actually money.

Now that you know that a good credit score has financial benefits; it’s time to start concentrating on your credit bureau score and make it better.

This guest post is authored by  Arun Ramamurthy.

Arun - Credit Sudhaar

Arun is an IIM alumnus with work experience at leading global banks in India. He is the co-founder of Credit Sudhaar, a company which aims to spread awareness about importance of credit health and help people achieve their financial objectives.

(Kindly note that is not associated with Credit Sudhaar. This post is for information purpose only)

  • Arjun A says:

    Hi Sir,

    Does bank consider CIBIL score to grant loan under MSME scheme.

    Many thanks in advance!

    Arjun A

  • creditloan says:

    If you have any issue regarding cibil report and cibil issues then contact to prisha-7208205581.She is a expert from Credit 4 Loan who helped me too improve my score very well or visit them at

  • sir,
    i got personal loan from sbi in june 2014. bank fix my emi date as a 25 day of month. but every month i received massage from sbi that your due date is 20th but my emi debited on 25th. it is continued. within this circustance i approach to another bank for another personal laon, they pointed out that my CIBIL report is -tive. than i changed my emi date on every 5th of the month. but i again received the massage from sbi. what can i do to improve my CIBIL report. bank side not helped me. they say it is system’s error.

    • Ishika says:

      Hi Mithilesh,

      I went through your post and see that there is a banks fault who is not deducting the payment on a timely basis which is affecting your credit score. Firstly, I would advise you to apply for a credit report as it will have the repayment track record submitted by SBI bank.

      Once you get the report and if you find any issues with the payment history you can surely raise a dispute and get a favourable response. You can also get a proper guidelines by hiring a credit counsellor. They have immense knowledge about and you really dont have to wander here and there.

      • Dear Ishika,
        Thank you for sharing your inputs.
        Is ‘free credit report’ provides info on credit score only or a detailed credit report? Do we need to share any personal details while applying for ‘Free Credit Report’? If yes, how secure is this data? Kindly share your views.

        • Ishika says:

          The Free Credit Report will only have a 3 digit score given by the bureau. For this you just need to share your PAN card and address proof copy. The ID and address proof should be self-attested and you need to mention the reason of submission the copy so that no one can misuse this for other purpose. By doing this your details will be safe.

  • Parveen says:


    First of all thank u . I do not have credit card. But on the basis of bank transactions is it possible to take a loan under MSME? as i want to set up a business for my husband under this scheme, as i am not able to approach under MUDRA as we require around 2 lakh rupees for the same. Do they consider my take home salary for this loan?

    • Dear Parveen,
      Try approaching a bank where you have savings account. As suggested in my previous comment, you can submit your Income Tax Returns. Are you going to take Joint-loan?

      • Parveen says:

        No, am applying in my name. I have filed income tax returns for the assessment year. But still my Bank is not helping me in any way.My Husband and my accounts are in different Banks. Can i approach his Bank to provide a loan in my name as my banks are looking at my take home salary that is 15300/- at present. please suggest me a way to take a loan to set up a mobile canteen business, which at least requires 1.75 lakhs. He has been working in the same field.

  • Parveen says:

    I have not taken any loan in my life time or past 12 years? But i would like to go for a business loan under MSME scheme. Will my banking transactions are considered for Good debt or Good Cibil score ? Is it going to help me in any way?

    • Dear Parveen,
      If you do not have any loans or not taken any loans, CIBIL score may not be applicable for you.
      Do you use credit card(s)??
      Banks may look at your bank statements or Income Tax Returns or Net-worth statements prepared by CA to decide on the loan terms & conditions.

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