How to Use Personal Loans To Improve Your Credit Score

Personal loans are an easy source to meet financial emergencies and financial goals. A personal loan is an unsecured loan which means you don’t need to pledge anything against the borrowed sum. 

As a renowned personal loan provider in Delhi we know that when a personal loan is prudently serviced, they could contribute positively to improve your credit score. 

So can you take a personal loan to improve your credit score? Absolutely yes.

Personal loans play an important role in affecting your credit score. A personal loan can affect your score either positively or negatively. Availing of a personal loan affects your credit score negatively by a few points. However, paying your loan on time improves your credit score. 

A credit score is a primary factor considered by lenders before providing a personal loan. Let’s look at some top points to get a better credit score. 

 

Do not apply with multiple lenders:

Do not make multiple inquiries to different lenders; it affects your credit score negatively. As renowned personal loan providers in Delhi, we suggest making only one or two hard inquiries at a time. Every hard inquiry reduces some points from your credit score. 

 

Choose amount as per your capacity:

When you are not sure about the required amount you may tend to over-borrow. If you borrow more than the required amount it may be difficult to pay the loan amount in the long run. To create a proper plan and then go for the personal loan. Proper financial planning will help to pay the loan on time. 

 

Choose longer tenure:

We suggest you choose the longest tenure for a personal loan. A longer tenure will help you to keep your monthly EMI low. Smaller installments can be easy to pay, especially keeping in mind that day-to-day expenses cannot be neglected. So a longer tenure is always favorable for you. 

 

Make timely Repayment:

Making your loan repayment on time is considered a primary factor to improve your credit score. Paying dues without delays denotes how responsible you are about your loan. This makes a direct impact on your credit score. Where defaults and late payments reduce your credit score

 

Report errors in credit score:

While serving personal loans you should have to make sure that all your payments are updated on the lenders portal. Alongside you need to keep an eye on your lender’s portals and credit reports. If you found any error in the credit report then you should have reported the error.

If you are planning to take a personal loan then keep the above-mentioned points in your mind so you can maintain a healthy credit score.  

 

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