A loan or credit is money given to you by a lender with the expectation that you would repay it on time. On the other hand, a credit score reflects how well you manage your credit payments. To address the question, yes, a Bajaj gold loan or credit, in general, does have an impact on your credit score. If you pay off your credit card or gold loan on time, your credit score will increase.
On the other hand, any carelessness concerning loan payments can negatively impact your credit score and, as a result, your ability to get a loan in the future. To do so, you’ll need to understand how a gold loan might affect your credit score. We’ve addressed a few topics below to assist you in better understanding how a gold loan would affect your CIBIL credit score:
Ways to raise your credit score
One of your credit score factors that carries the most weight (35%) is your repayment history. You may enhance your credit rating with a Gold Loan by making on-time repayments. We’ve shown how gold loan repayment affect your credit score in a few ways. Take a peek around!
Application for a gold loan
Did you realize that taking out a gold loan might influence your credit score? It’s right, and you read that correctly. Even if it’s just a few points, asking for a gold loan might lower your credit score. How? Lenders do a rigorous investigation every time you ask for a gold loan.
If you’re wondering what a “hard inquiry” is, it’s when a lender requests your credit report from credit agencies to determine whether or not your application should be granted. Your credit report will show this complex investigation. You must have a hard inquiry on your credit record to get a gold loan.
However, several queries on your credit report in a short period may signal that you are credit needy, i.e., you either need a loan urgently or are taking more than you need — neither of which is a positive indicator.
Combining secured and unsecured debts is one of the most effective strategies to boost your credit score. However, if your CIBIL score is high enough, you may qualify for an unsecured loan. Lenders and borrowers can work together on a gold loan.
These include simple qualifying requirements such as no income verification or CIBIL Score, online gold facility, increased loan amounts, rising gold rates, etc. An emergency gold loan may help you get cash during times of need while also establishing a credit mix consisting of both secured and unsecured debt.
Timely EMI payments
The ability to repay gold loan in various ways is one of its most appealing aspects. Lenders provide different repayment options, including Equated Monthly Installments (EMI), one of the most popular. Bullet Repayment Methods, Advance Interest Payment, and Investment Return at the End of Term are the additional options.
For the time being, let’s talk about how EMI repayment works. Each month, you’ll be required to make a payment against the principal balance of your loan. This sum will include a part of the principle as well as interest. As we said before, your credit score is affected by your repayment history; therefore, making on-time EMI payments can help you build a better past.
Making on-time gold loan payment throughout your loan will steadily improve your credit score. It would help if you also kept in mind that missing any payments might have a negative impact on your credit score. If you miss an EMI payment by even one day, it will appear on your credit record.
Early repayment of gold loan
Gold Loans are often regarded as loans with a shorter term, which you may customize to suit your needs and preferences. One of the most effective techniques to increase your credit score with a Gold Loan is to pay off the loan before the pre-determined payback period ends.
On a Gold Loan, several lenders do not impose any prepayment penalties. Early repayment of your gold loan will appear on your credit record and positively influence your credit score. So, if your financial situation allows you to make an early payment on your Gold loan, doing so is unquestionably one of the most effective strategies to raise your credit score.
So now you understand how a gold loan might affect your credit score. Multiple loan queries might lower your credit score, while consistent payments can raise it. A Bajaj gold loan, without a doubt, provides a possibility for CIBIL repair. A gold loan is straightforward to get since it has several benefits over other types of credit. Gold Loan rates are lower than personal loan rates, and there are fewer qualifying conditions and paperwork requirements.