An instant loan such as personal loan is one of the most sought-after funding solutions for your multiple needs. If you are a salaried individual with a robust CIBIL score, repayment and income history, you can get an instant easily.
These days, you can also download a lender’s online loan app to apply for a loan quickly. You can access the loan app on your smartphone and enjoy many functions such as EMI payment, prepayment, foreclosure, logging a request, and many more.
An instant personal loan may offer you up to Rs.25 lakh with quick approval and fast disbursement procedure. However, if you are not a responsible borrower, then a personal loan can also hamper your credit score. When your credit score gets affected, then you also end up in not getting the future loan approvals. Read on for more!
Here’s how an instant loan can hamper your CIBIL score
How well or poor you end up managing the personal loan account may affect your CIBIL score. Have a look.
- Credit repayment history
You should be aware that your credit or loan repayment history is the most significant factor affecting the CIBIL score. Any default on your active loan account and even credit card bill is likely to impact the score negatively. What’s the way out? You need to maintain a strong repayment record by paying your instant loan EMIs and credit card bills on time to be rewarded with a better CIBIL score.
- Credit limit utilization
If you rely on your credit card and instant loan account for daily and other purchases, then it gives a negative impression to the credit bureau and hurts the CIBIL score. It is because it denotes your rising debt over time. It is computed by dividing the total outstanding amount with your credit limit. Thus, if you can reduce credit utilization over time, then it indicates that your repayment burden is falling. As a result, it may boost your CIBIL Score.
- When you apply for multiple loans at a time
Many people apply for an instant loan with many lenders at a time to secure at least one approval. However, you need to know that every time you apply for multiple personal loans or any other loan application, the lender pulls your credit score. Each time it happens, it brings down the CIBIL score by some points. Now, when that happens so many times due to many loan applications at a time, it is bound to bring down the score. As a result, you may end up not getting the loan approval. Hence, you should apply for one instant loan and wait for the lender to approve it. If it’s not approved, you should wait 3-6 months before trying again.
- Not checking your credit report for possible errors
When you have an active instant loan or any other loans, you should ensure to check out your credit report every six months to rectify any possible mistakes. The delayed or wrong reporting by lenders and banks may showcase faulty information on your credit report and lessen the CIBIL Score. Therefore, when you see any unknown entry on your credit report, you should rectify it with the help of the lender.
Some of the situations that can lead to hampering of CIBIL score are enlisted. You should consider these factors and manage your instant loan account responsibly.
Bajaj Finserv offers pre-approved deals on instant personal loans, home loans, business loans, EMI finance, credit cards and more. Such deals can minimize the overall loan formalities to make it less time consuming for borrowers. Its easy loan app helps you manage your loan account, pay EMI online, and foreclose the loan, making it one of the best loan apps in India.