How to Boost Your Credit Score with a Gold Loan?
Repayment history matters a lot and holds the maximum weightage of up to 35% in determining your credit score. If you wish to improve your credit score with a gold loan, you can do that by repaying the loan on time. Here are a few useful ways to do that.
Pay the EMIs Timely
A great benefit of a gold loan is that you can get various options for repayment. For instance, you can pay the EMIs every month, try bullet repayment by paying in full at the tenure’s end or pre-pay anytime during the tenure. This helps you decide the most convenient way to pay off the loan.
So, choose the repayment mode that suits you the most. Then make sure you repay the loan in full on time successfully. Even if you are late by one day, it can affect your credit score. If you make your repayment before the due date, that can have a very good impact on your score.
Today, you can repay a gold loan online using various digital payment modes for ease.
Repay the Gold Loan Early
A gold loan has a shorter tenure that can be chosen at your convenience. A good way to boost your credit score is to pre-pay the loan, i.e., repay it before the pre-decided tenure. See if the bank allows this repayment mode and charges any fee for that. Once you pay off the loan early, it will show in your credit report and have a positive effect on your credit score. Therefore, if you can afford to prepay a loan, do that to up your credit score.
Benefit from the Credit Mix Brought by a Gold Loan
Sometimes, you can boost your credit score through a credit mix in your financial profile. This aspect has up to 10% of weightage in impacting your credit score. A credit mix refers to having both unsecured and secured loans in your borrower’s profile. A gold loan is a kind of secured loan since you can get it against the collateral of gold jewellery. Thus, it helps bring some credit mix to borrowers’ profiles.
Say, you possess a credit card in your name and still require immediate funds. Remember that a credit card is a kind of unsecured credit. So, now it would be better to apply for a gold loan rather than a personal loan since the latter is an unsecured loan. If you repay the gold loan online on time, your score will increase. As a secured loan, its interest rates are lower. Therefore, the EMI amount is lower and you can expect to repay the loan easily.
Estimate Your EMI Amount
If you settle for an EMI amount within your repayment capacity, chances are that you can pay it off easily. So, estimate the EMI amount first. For that, use the online gold loan calculator on the lender’s website. Choose the loan amount that you wish to borrow, a suitable tenure and a rate of interest on the calculator. Then check the result. If you feel that you can afford the EMI amount, go ahead. If not, keep adjusting the loan parameters until you settle for a payable EMI amount.
By having an early idea of the EMI amount, you can manage your finances more effectively. You can make sure to keep aside a certain portion of your salary/savings monthly and not be in uncertainty.
Consider following the above tips to boost your credit score with a gold loan. Once your score becomes high, you can qualify for the most competitive interest rates on loans.