Personal loans are a great option for financial emergencies as they do not require collateral and have simple formalities. But did you know that you can improve your credit score with a personal loan? You must have heard that it is also necessary to have a good credit score to get a personal loan in the first place. Yes, that is correct! However, you should keep in mind that your credit score is not the only factor considered by lenders while determining your creditworthiness. Some lenders may offer personal loans to individuals despite low CIBIL scores. Again, some lenders are willing to offer unsecured Personal Loan to people with 'reasonable' credit scores if they meet other requirements.
Financial management and planning are important parts of our life. Calculating taxes, paying bills, and managing debts are not only important for our financial well-being but also affect other aspects of our lives. Despite the impeccable planning of our finances, sometimes we find ourselves in situations when we are short of money where a personal loan can help us to manage the financially tough times in our life. On top of this, if we can maintain good financial discipline while managing personal loans, then it can help in boosting our credit score, thereby helping us to get loans with more favorable terms in the future.
Here are some of the benefits of taking a personal loan to improve your credit score:
Taking a personal loan is the easiest way to repay your old debts. Plus, it also helps in improving your payment history, which in turn, improves your credit score.
When you apply for a loan, you pay it in installments determined by the lending institution based on your ability to repay it. Because you do not have to remember numerous EMI due dates, you can simply pay the installment for one loan on time which will contribute to your credit history and boost your credit score.
Now that you have a brief idea about the nature of the loan, you should also know about the right time to apply for a personal loan.
You are facing a cash emergency – it could be any sort of cash emergency, whether it is any personal need, health emergency, or family crisis. Taking a loan against your credit card proves to be costly in such situations, so applying for a personal loan would be the best option.
You are paying off a high-interest loan – Personal loans are excellent for consolidating existing high-interest debts, including paying off multiple credit cards payments.
You do not want to put your assets at risk – Unlike a Loan Against Property which is available only as collateral against your home, you can get a personal loan without collateral. Although personal loans may charge higher interest rates than fixed-rate home equity or similar loans, it is a safer option for those struggling to improve their credit scores by taking on minimal risk.
Personal loans are not only meant for financial emergencies but also help in building a good credit rating. Consolidate your loans or take out a personal loan that you can easily pay off.
We all have multiple needs and goals. However, our financial situation often hinders the path to achieving them all. Thanks to Personal Loans, addressing these needs is possible now.
A Loan against property is a secured loan granted when you offer your existing residential or commercial property as collateral.
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