Loan can improve your Credit Score
A personal loan can be a real life saver in times of need. This loan can help you pay off debts, fund and education, make home improvements, or fund a medical procedure. Applying for a personal loan online is super easy too. All you need is your proof of identity and a few bank details. One crucial thing you need though is a good credit or CIBIL score.
For borrowing money from a bank, the most important fact that they take into consideration is your credit score. Your credit score is a three-digit number ranging between 300 and 900. It is a numerical expression of an individual’s creditworthiness. It tells your bank about your eligibility and your capability to repay the loan. Your credit score is determined through an analysis of your credit files such as credit card payments and loan accounts. Generally, a credit score of 750 and above is said to the ideal score for getting a loan or a credit card approved.
When you take a bank loan your credit score is affected. But taking a personal loan the right way can also help you improve your credit score. Here’s how to do it.
Give it a thought
Before you apply for a personal loan online , give a thought to the amount you’re asking for. Your income to debt ratio should always be positive. Apply for a loan that is well within that range.
Don’t apply too much
Don’t take or seek too many loans at the same time. If for some reason your loan application gets rejected, refrain from immediately seek another loan. Your applications too are reflected on your credit score.
Get the right loan offer
Choosing the right personal loan is a crucial step towards a good credit score. A loan amount and an interest rate that you can easily pay off with your monthly income will ensure that you don’t default or Miss EMI payments. Timely repayment of your loan has a big impact on your credit score.
Pay your EMIs on time
ď‚´ Never miss your EMI payments as missing even a single payment can have an impact on your credit score.
Don’t prepay your loans
Although prepayment of personal loans is good for the customers, it can reflect badly on your credit score. It reflects badly on your long term creditworthiness. So even if you come into a huge amount of money, use it to pay EMIs in bulk instead of prepaying your entire loan.
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