Responsibly managing personal loans can improve your credit score. So, let’s find out how:
Paying your debts on time not only indicates how responsible an individual you are. It also builds a good credit score. Consistent payment history will reflect your credit report and improve your credit score over time. Enabling automated payments is the best option if you are forgetful, which can help you to prevent delayed or missed payments - even for a 1 Lakh Personal Loan.
The basic thumb rule is to stay below 30 percent of your income on your total credit utilization ratio. If credit utilization exceeds 30 percent, it can lower your credit score. Hence, limit your purchases on credit cards if not necessary, to avert paying higher interest rates on debts. On the other hand, defining your credit utilization usage would help boost your credit score.
Taking a personal loan for consolidating debts is a brilliant idea as this will combine multiple loans into a single personal loan. This will reduce the overall interest rate and enhance your credit score.
When you have a combination of credit types with disciplined repayment records, it shows that you are good at managing various financial obligations with steady payment history. Moreover, it helps the lender in offering loans as per your requirement.
When you take a personal loan for a more extended period, it can help improve your credit score as EMIs are less and easily repaid. So, when you make regular payments for monthly instalments for an extended period, your credit score will get better and improve gradually.
When taking a personal loan, you can improve your credit score with the above methods. Just with your alertness in maintaining a financial track record, you can increase your credit score easily even when applying for a personal loan on 19000 salary.
Hero Fincorp offers a wide range of financial products including Personal Loans for personal needs, Business Loans to support business growth, Used Car Loans for purchasing pre-owned vehicles, Two-Wheeler Loans for bike financing, and Loan Against Property for leveraging real estate assets. We provide tailored solutions with quick processing, minimal paperwork, and flexible repayment options for smooth and convenient borrowing experience.