Does a Personal Loan improve Credit Score ?

Last Updated : July 13, 2021, 12:40 p.m.

Building a good credit score is very similar to building a good reputation, especially when you are looking for a personal loan. Yes, a good credit score plays a vital role in your loan journey as it can either make or break the situation for you. But, it is also a fact that few situations in life cannot be ignored as they need your attention right away. Situations like a medical emergency, debt consolidation, buying a new appliance or renovating a home, need funds so that these requirements can instantly be fulfilled. And, this is where a personal loan comes into the picture, giving you an opportunity to live your dreams without worrying about cash in hand.

Fact of the matter : Does a personal loan improve credit score ?

What to do if you have a bad credit score? Does a personal loan improve your credit score ? What are the ways that can help in improving your score, thus making you eligible to apply for a loan? These are the few questions that may disturb you, make you think that you won’t avail a personal loan in the future. Wait a minute! Are you thinking that it is not possible to avail a personal with bad credit score? If yes, hold your breath because what’s coming next will fill your life with extreme delight.

Well, let’s reveal the suspense! Did you know that personal loan can boost your credit score? What, sounds unbelievable to you? But folks it is true that a personal loan can actually be a great way in improving those key inputs in building your credit.

So, without wasting any time let’s get started and look at the ways that can be a saver for your poor credit score.

A Collateral Can Be a Boon:

Yes, you read that absolutely right. As a rule, if you have a higher credit score, you can enjoy better interest rates on your loan. But, don’t be disheartened as those who are not in 750+club can also get reasonable rates, if they have a collateral by their side. Most of the banks and non- banking financial companies (NBFCs) provide a personal loan to such applicants, by mortgaging an asset be it home, car, gold, etc. Having a collateral is just like a boon as it can help you in availing a loan with the maximum amount. By giving any sort of collateral or security to the lender a loan can be availed by you and not only this, you can get a loan for up to maximum loan amount. Isn’t it great news folks? But, do make sure that you repay the loan this time without any default because if you won’t do it this time, not only your credit will badly affect, but you may also lose your asset to the lender. So,go and fulfill your wish as now there is no one you can stop you from chasing your dreams.

A Co-applicant Can Be Your Best Buddy:

If you are finding it difficult to avail a loan individually so as to improve your credit, nothing to worry as you have another great option. Well, adding a co-applicant to your loan can work wonders for you and help you in getting a loan easily. If your score is low, most of the lenders don’t consider you eligible for a personal loan as you have a bad credit history. But, adding a co-applicant to your loan application is undoubtedly a smart move as it can helpful for you in many ways. Just because you have a poor credit score, so it would be difficult for a lender to trust you again, hence a co-applicant in that situation will legally be responsible for repaying the loan on your behalf. The lenders are always more than happy to welcome a co-applicant because they know someone would repay the loan, in case you won’t. So, keep your worries away and don’t let anything come in between you and your happiness.

Now that you know how does a personal loan improve credit score, thus there is no looking back. So, what are you waiting for? Put a big smile on your face and apply for a personal loan today without bothering about your low credit score to achieve all your dreams.