In today’s world, our financial needs are many and sometimes we have to get bank loans. Emergencies happen in life and then we become forced to borrow money from the bank. However, as you’re planning for future retirement, make sure you’ve got a good CIBIL score.
Retiring can be an exciting time filled with new possibilities and experiences.
But before you can truly enjoy your newfound freedom, it’s essential to step back and ensure your financial affairs are in order.
One of the most critical considerations is maintaining a good CIBIL score after retirement. It can give you the peace of mind to enjoy your retirement years.
What is a good CIBIL score?
CIBIL score is a credit score used by lenders in India to evaluate the creditworthiness of a borrower.
The score ranges from 300 to 900, with 900 being the highest score a borrower can achieve.
Generally, a CIBIL score of 750 or above is considered good and may help you qualify for credit with favorable terms and lower interest rates.
However, consider that lenders also consider other factors such as your income, employment history, and debt-to-income ratio when evaluating your creditworthiness.
Why Keep a good CIBIL score
Let’s look at the 5 reasons why improving CIBIL score in these later years matters.
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At the time of Emergency, You Can Easily Get a Loan
At any moment, your car could fail, or your home could require work, so it’s essential to have some cash saved up – at least six months’ worth of living – in case of significant expenses that could drain your funds and necessitate borrowing.
A good credit score is beneficial as it gives you the option to get a loan in an emergency.
It’ll be easier for you to get a loan if you have a good credit score, and your loan application will be given preference over someone with a lower score.
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You Can Get Low Insurance Premium Due to High CIBIL Score
Another important reason to increase your CIBIL score is to get lower insurance premiums.
You probably didn’t know this, but your credit report can impact your monthly insurance premium. A good credit score reflects that you are responsible and can handle risks well.
This will create an impression of a low-risk person in the mind of the insurance company executive.
With a good CIBIL score after retirement, you have the leverage to negotiate or renegotiate the premium rates and insurance terms.
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You Get the Freedom to Follow Your Passions or Do Business
Do you see retirement as an opportunity to finally do the things you are genuinely passionate about and never had the time to pursue due to other responsibilities?
A good credit score helps you get the credit you need to make your dreams a reality. You may invest in a business or start one of your own.
So, if you maintain a good CIBIL score after retirement, you can be sure that you can do the things you have wanted to do for a long time and be able to cover the costs of your start-up.
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You Can Refinance Your Mortgage or Consolidate Your Loans
Understanding the importance of the CIBIL score is critical to accessing refinancing options for collateral investments, such as a mortgage.
A good credit score can give you access to liquidity through a mortgage cash-out refinance.
And having a good CIBIL score makes it easier to refinance your mortgage or consolidate your loans.
This allows you to manage your debt and save more. So, it’s worth taking the time to understand and track your score.
Doing so can open up more opportunities for managing your finances.
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You Can Make Expensive Purchases Easily, Like a New Home or a Car
You don’t become a hermit after retirement! So contrary to popular belief, you may need to make expensive purchases like a home or a car in later years.
For instance, if you once had a big house, you may want to shift to a more compact and manageable residence. A good credit score can help you secure a loan for this purpose.
Even if you’ve saved up enough to buy a new home or a car, having a good CIBIL score after retirement can open up more options for you.
You’ll have access to more attractive deals and debt options, and you could get a better loan interest rate.
Increasing your CIBIL score post-retirement is crucial to ensure you have access to better financial services and can secure a better loan rate.
This will ensure you have enough access to funds when you need them and can pursue whatever dreams you may have.
Here comes a bonus! Check out these tips to improve your CIBIL score post-retirement:
- Make sure you pay your bills on time
- Keep your credit utilization low
- Regularly review your credit report for any mistakes.
- Lastly, limit the number of credit accounts you open.
Author Bio:
Shiv Nanda is a financial analyst currently living in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit line.
Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters, and when they want to get a loan.
He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at [email protected].
