About Credit Score:
It is a three-digit number that determines an individual's creditworthiness. Your loans will get processed according to your credit score. If you have a good/excellent credit score, then your loan application will be processed quickly. However, if you have a bad credit score, then banks will either reject your application or you'll be charged with a high SBI Gold Loan Interest. Your credit score is the result of your credit report.
There are some primary columns in your credit report, and those are -
Repayment History:
No one wants a risky customer. So banks check the past loans, debt, and credits taken by the customers and how they would repay it over time. The most basic question the lender will ask while checking your credit report is, "will they repay my money on time" so, you should have a look at your credit report and then ask yourself this question: would you give someone money who has a credit report same as yours. Credit bureaus have a complete record of all your past loans, so if you've missed even a single installment, had a default, or missed your EMI, then it will be shown to the lenders.
Credit Mix:
It shows the types of loans that you have taken. So if you have a healthy balance in your credit portfolio of the right mix where you are taking both secured and unsecured loans for a reasonable amount of time, then it will be beneficial for you and will impress your lenders. However, if you've taken unsecured/secured loans multiple times, then it will create a bad image in front of your lenders. They'll have to think twice before approving your application. So always think carefully before applying for a loan.
Credit Limit:
Your credit limit has a 30% impact on your credit score, so you must be thinking: what is a credit limit? But it's nothing more than the limit that has been placed on your credit card. So if you have always utilized money within your limit and even paid the amount on time, then it will create a good impression and will portray you as a responsible borrower. But if you've been utilizing more money than your credit limit, then it will create a bad impact on your credit report. So don't spend money unnecessarily.
New credits:
All your credits, loans, and debt are recorded by the credit bureaus. So if you've taken a new loan, then it will create an impact on your credit report. However, if you've taken multiple loans at the same time, then it will create a harmful impact on your credit report. Because if you're unable to repay even a single installment, then it will heavily affect your credit score and will bring it down.
Credit History:
Credit history shows the time since you have been using credits and how you have repaid your dues on time. Clearing your dues on time and following all the other guidelines, including having a proper credit mix, shows how reasonable you are. It basically indicates that you have more experience in handling credits and have been responsible for an extended period of time.
Affect of credit score on gold loan -
A gold loan is a secured loan, so you can quickly get funds without necessarily maintaining a good credit score. You’ll get funds according to your Gold Loan Rate Per Gram. However, if you are applying for a gold loan, then it will create an impact on your credit history and will be shown to your future lenders. Missing even a single installment will leave an impact on your credit report for at least six years. And in case the borrower is unable to repay the entire loan amount, then it will be shown in your credit report.
Conclusion:
So your credit report has no impact on your gold loan because you can get funds through this loan even if you have a bad credit score. However, your gold loan has a direct impact on your credit report.
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