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Can you boost your credit score with the help of a personal loan?

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Can you boost your credit score with the help of a personal loan?

As surprising as it may sound, you can actually enhance your credit score by strategically using your personal loan. Personal loans are usually more affordable as compared to most credit cards available in the market. As a result, they are cheaper and better options in terms of the interest that you end up paying every month. You can always improve your CIBIL score by consolidating all your credit cards and replacing them with just one personal loan for debt consolidation. There will be a single EMI to pay as compared to multiple payments.

In case you manage your personal loan efficiently, you can actually improve your CIBIL score. However, make sure that you make loan repayments in a timely manner. Personal loans are always handy in case of sudden financial requirements or other emergencies. A personal loan for debt consolidation is the best way out in this regard. Outstanding debt across multiple credit cards will negatively impact your CIBIL score and the interest rates will be sky-high as well. You will have to make multiple payments and may even miss/default on payments which will bring your CIBIL score down further.

Additionally, the high rate of interest across several credit cards will be a major burden on your finances. The interest keeps accumulating on credit cards if you keep repaying just the minimum payable amount every month. As a result, personal loans are the best options for borrowers. These have lower rates of interest, are easier to obtain and can be used to consolidate all debt and repay credit card dues instantly. As a result, you will have to pay just one EMI which lowers your chances of defaults and the interest rate will be lower and you will save more money every month.

Timely repayment and consolidation of debt with a personal loan will actually boost your CIBIL score. However, you should always apply for a personal loan when you really require the same and not shoot off multiple applications to several lenders otherwise your CIBIL score will be impacted negatively since lenders will perceive you as being desperate for credit.

 

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