A secured loan taken from a lender in return for the borrower’s gold items as security is known as a gold loan. The loan amount is calculated as a proportion of the gold’s prevailing market worth and purity, generally up to 80%. Low gold loan EMI rates are available from nationalized banks, private banks, and other investment companies. Unlike other loans, which may impose limits on how the money are used, this loan has none.
Nbfcs, investment corporations, and other financial entities make gold loans at low interest rates. Unlike other loans, which may impose fixed terms and restrictions for the use of funds, Gold Loans allow clients to utilize the cash for any reason, such as educational, emergency situations, weddings, and so on. Your credit rating is influenced by how you control and manage your credit payments (a numeric summary of your credit history). Late payments on any loan EMIs, credit card bills, or other expenses will lower your credit score.
The greatest part about a Gold Loan is that, unlike other loans, it has less stringent qualifying requirements. Before approving your gold loan application, lenders do not look at your credit score. As a result, even someone with a bad credit score may apply for a gold loan and increase their credit score over time by paying off the loan on time. The gold ornaments and jewelry that you will present as collateral against the gold loan amount will determine the amount of your gold loan. The amount of the loan will also be determined by the overall value of your gold.
Payment history is one of the parts of your credit rating that carries the highest weight, accounting for 35% of your overall score. The best way to boost your credit history with a Gold Loan is to pay it back timely. We’ve shown how Gold Loan repayments effect your credit rating in a few different ways. Take a peek around!
1. Pay EMIs on Time
The ability to repay a Gold Loan in a variety of ways is one of its finest benefits. Lenders provide a variety of repayment options, with EMI being one of the most prevalent. Rapid Repayment Ways, Upfront Interest Payment, and Interest Payment at the End of the Term are the additional options. Returning to the EMI repayment options, you will be required to pay a certain amount monthly to repay the debt. This sum will include a portion of the principle as well as interest. Your credit score will increase over time if you pay your EMI on or before the due date.
2. Early Gold Loan Repayment
Gold Loans are typically thought of being loans with a reduced repayment period that you can pick as per your needs. Making your Gold Loan repayments before the pre-determined duration is one of the most effective ways to boost your credit score. On a Gold Loan, some banks do not impose any penalty fees. When you pay off your gold loan beforehand, it will appear on your credit record and have a favorable influence on your credit score. So, if your resources allow it, paying off your gold loan early is undoubtedly one of the simplest means to enhance your credit score.
3. A certain credit mix is maintained by a gold loan.
It also helps to have a credit mix in the entirety of your profile when it comes to increasing your credit rating. This is also one of the factors of your credit score those accounts for 20% of the gross amount. A credit mix refers to a financial profile that includes both secured and unsecured borrowings. You may be aware; a gold loan is a secured source of finance in which you guarantee gold articles and jewelry as collateral. That is why a Gold Loan can assist people in achieving a specific credit mix in their assessments.
Credit rating is a concept that is affected by a cascade of factors. But sometimes the simplest methods like repaying your loans timely, keeping financial credibility can go a long way in helping you establishing a viable credit score!
Maintaining a credit score gets easier with a secured, reliable gold loan lender too. IFL housing finance brings you gold loans with low interest rates, easy terms of repayment which will assist you in getting a high credit rating that will lead you to financial credibility! Reach out to our advisors and get on the road to financial freedom now!