How Can Personal Loan Help you to Improve CIBIL score?
Posted by Pardeep Sharma on June 3rd, 2019
Building a good credit score means making yourself more creditworthy for lenders. Your credit score reflects your previous repayment behaviour and financial status. It also decides your borrowing potential. Without a good score, it gets difficult to apply for a loan.
Taking a personal loan is one of the guaranteed ways to improve your CIBIL score. If you don’t know how to improve credit score, then loans are the ideal choice.
You can not only reduce your financial burden, but also improve your CIBIL score at the same time. Moreover, improving your CIBIL score can be useful for a variety of reasons, including better financial terms for your future requirements.
How can personal loans effectively improve your CIBIL score?
Personal loans can improve your credit score provided you make the EMI payments on time. Partial, delayed or missed loan EMI payments can affect the credit score negatively. You also attract penal charges and check bounce fees.
Use a personal loan EMI calculator to calculate your monthly instalments before you apply. This tool can help you plan your repayment schedule for the respective loan amount and its tenor.
Now that you know how to improve credit score, you have to make sure that you choose and manage your personal loan carefully.
Here are some of the ways to do precisely the same:
1. Don’t go for multiple loans at a time
When an individual applies for a loan, a hard enquiry is made which reflects on the credit report. Such enquiries lower your credit score. Multiple hard enquiries can cause drastic harm to your credit score. If you want to know how to update CIBIL score, then start by avoiding multiple loan applications at a time.
2. Compare the different loan options
Interest rates and fees are two important factors which you should consider before opting for a personal loan. There are several online comparison portals where you can scroll through the various financial institutions and the features they offer with their loans. Or, you can also opt for an expert consultation.
3. Decide carefully on the loan amount
The first thing to do is to assess the need for the personal loan. It is recommended to borrow a small amount in case the purpose of the loan is only to build credit. It ensures that the individual can build credit without having to worry about repayments.
4. Maintaining minimum debts
An improved credit score also enhances the eligibility for other types of loans. However, it is recommended to not rack up debts by borrowing more. To know how to improve your CIBIL score, maintaining a low debt-to-income ratio is one of the first things you should do.
Many individuals due to several circumstances do not opt for loans even in times of need. To address this, a lot of financial institutions offer various facilities along with their loans which make availing them much more hassle-free.
Bajaj Finserv is one such NBFC which provides personal loans up to Rs.25 lakh at competitive rates of interest and repayment tenors of between 12 and 60 months.
Bajaj Finserv also provides pre-approved offers on personal loans, business loans, home loans and other financial products. These offers make availing finances simpler and also help you save time. Provide a few necessary details online and check your pre-approved offer.
Situations such as renovating your home, going on a vacation, and debt consolidation can take a toll on the finances. Taking a loan can be quite beneficial in these times. It can be your way out of financial distress, helping you in case of any emergencies, and also improving your credit score with proper repayments over the tenor. So, apply for a personal loan if you are thinking about ways to improve credit score while maintaining your finances.
