Planning a Loan? Know How It Affects Your Credit
Score First
Taking a
personal loan can either boost or damage your credit score — depending
on how you handle it. Let’s break it down.
📈 How Loans Help Improve Credit
Score
- On-time EMI payments = good
repayment history
- Adds to your credit mix
(secured + unsecured)
- Improves your
creditworthiness for future loans
📉 When Loans Hurt Your Credit
- Late or missed EMI = major
negative impact
- Too many loans = “credit hungry”
status
- Default or settlement =
long-term damage (7+ years)
📊 Loan Approval Factors
- CIBIL Score (ideal: 700+)
- Monthly income vs EMI ratio
- Existing loans & card
dues
- Job stability or business
vintage
💡 Pro Tips
- Keep EMI under 35% of your
income
- Avoid back-to-back loan
applications
- Never ignore a ₹100 EMI
delay — it’s reported the same as ₹10,000
✅ Conclusion
Loans are
tools — not traps. Use them with discipline, and your credit score will rise.
Abuse them, and even ₹1 crore income won’t help.
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