How a Personal Loan can Improve Your Credit Score?

Apply for Personal Loan

May 27, 2021Personal Loan

You can apply for a personal loan to arrange funds for any purpose including buying an electronic gadget, travelling on a holiday, tuition fees for higher education and even medical emergencies. The borrower doesn’t need to pledge any collateral to avail of a personal loan and can expect the loan application to be quite hassle-free.

However, sometimes you might want to take a personal loan to improve your credit score. With a high credit score, you can avail of higher loan amounts, enjoy lower interest rates, longer repayment tenures and quicker approval on loans or credit cards.

What Qualifies as a Good Credit Score?

A credit score is primarily calculated based on the following factors –

  • New debt
  • Types of loans taken
  • Total debt owed
  • Length of the credit period
  • Repayment history
  • Debt to income ratio

Credit scores range between 300 to 900. A minimum CIBIL score for personal loan of 750 or above is considered a good score and will help you to qualify for credit cards and personal loans.

If your credit score is below 750, it may be difficult for you to borrow from NBFCs and banks. Financial institutions may still agree to lend to you but at higher rates of interest.

However, if your credit score is significantly lower than 750, lenders may reject your application outright.

How Can I Improve Credit Score With Personal Loan?

Debt Consolidation

One strategic and popular use of personal loans is debt consolidation.

Imagine you have an outstanding balance on 3 credit cards. This involves 3 separate payments on 3 different interest rates. With a personal loan to improve credit score, you could pay off your credit card debt in one go. This would leave you with just one outstanding debt to repay. The monthly interest rate would also be lower than 3 separate credit card interest rates.

Paying off your credit card debt will lower your credit utilisation ratio, a key factor that determines your credit score.

Must Read: How is Your CIBIL Score Calculated?

Payment History

How you repay your debts go a long way in improving your credit score. If you make on-time payments towards your personal loan to improve credit score, you build a positive payment history. This, in turn, favourably affects your credit score.

Credit Mix

Your credit score is also dependent upon your efficient management of multiple debt instruments.

Imagine that you are competing with a fellow borrower for a personal loan to improve credit score. Both of you have a good credit history.

However, one of you has availed a mortgage loan, an auto loan, a student loan and credit cards to his name while the other only had credit card debt. Lenders will always prefer borrowers who have a diverse credit mix as opposed to individuals who have only managed one form of debt.

Avail an Instant Personal Loan From Fullerton India

Fullerton India offers instant personal loan facilities online to both self-employed and salaried individuals. If you are availing of an instant personal loan from Fullerton India, you can borrow up to Rs. 25 lakhs*. Borrowers can avail of an instant personal loan with flexible repayment tenures – up to 60 months.

You can also avail affordable personal loan interest rates starting from 11.99%. In the event of a financial emergency, you can apply for an instant personal loan through our online portal in a matter of minutes without leaving the safety or comfort of your home. Salaried applicants can also download Fullerton India’s personal loan app - Instaloan to enjoy a seamless digital loan application process.

Before applying for an instant personal loan from us, you can check your eligibility status on our website. You can calculate your EMI based on your instant personal loan amount and repayment tenure.

Must Read: 5 Big Factors That Can Affect Your Credit Score

Check Your Credit Score For Free On Fullerton India

On our website, you can use our CIBIL score checker for free. It is a simple process that requires just a few financial and personal details from you.

Click here to know your credit score Fullerton India offers free credit score via CRIF Highmark, which is similar to a CIBIL score checker. You would be required to define whether you are salaried or self-employed.

  • After that, you need to click on ‘Continue’.
  • We will ask for a few of your details such as your name, your PAN card number and birthday.
  • Post this, you would have to fill in details about your monthly income and monthly EMIs
  • After this, you will encounter a page where you need to fill in your mobile number. An OTP would be delivered to your number.
  • Once you enter the OTP and click on continue, you need to fill in your PIN code, PAN number and email.
  • Check the box for confirming terms and conditions and click on ‘Get my free credit score’
  • After this, you will be asked a set of questions on loans, credit cards and few other factors. Answering these questions helps to calculate your credit score via the CRIF highmark  credit score checker.

After you complete the processes mentioned above and submit them, you can view your credit score.

If you are looking for a personal loan, Fullerton India's offerings are among the best in the industry. In addition to meeting your urgent financial needs, when utilised efficiently, you can improve credit score with personal loan.

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