Top Reasons to Get an Instant Personal Loan to Improve Credit Score

Top Reasons to Get an Instant Personal Loan to Improve Credit Score

Struggling with issues related to poor credit rating? If so, you may be able to build credit and improve your CIBIL score with an instant personal loan! Several factors may cause your credit rating to down. If you have just started your financial life, it is natural that you won’t have an impressive credit record. On the other hand, if you have suffered a series of misfortunes, which led you to make some poor financial decisions, your credit rating is bound to take a hit. Having bad or no credit can make your financial life miserable. Bad credit not only makes you ineligible for traditional loan products, but it may also prevent you from getting other financial products and even your dream job!

What is CIBIL score and how is it calculated?

Before delving into the details of why you should get an quick personal loan to improve credit rating, you must brush up on some of the basics. The CIBIL score, also known as credit rating, is a three-digit number that ranges between 900 and 300. While a score of 900 is considered to be “excellent,” a rating of 300 is deemed as “bad” or “poor.” Your CIBIL score denotes your credibility as a borrower. Banks and NBFCs use this score to ascertain your creditworthiness. The higher your score is, the better are your chances of finding instant loans and other financial products at favourable rates and terms. The CIBIL score is measured based on the following factors:

  • Credit utilization ratio
  • Repayment history
  • Length of credit history
  • Credit mix
  • New credit requests

How does an instant personal loan help to improve your credit score?

While it is true that having too much debt can damage your credit rating, you should also note that the right kind of debt can help you build credit. Having a healthy mix of unsecured and secured debt also has a positive impact on your credit rating. An small personal loan is an excellent tool for improving credit score. That is because it involves a monthly payment system. Paying the EMIs on time every month reflects well on your credit history and improves your credit rating slowly over time. If you are wondering why you should get an quick personal loan for building credit, here are a few critical reasons:

  • Quick personal loans are widely available and easy to obtain. It also involves a quick application and little to no paperwork.
  • Instant personal loans are much less expensive and a lot safer than credit cards. These loans are also more manageable, thanks to the monthly repayment system.
  • An instant loan can help you pay off existing high-interest loans. This way, you can eliminate the high-risk debt that you are currently struggling to pay off.
  • An personal loan gives you a bigger credit limit than credit cards. That means, you can borrow the amount you need and can comfortably pay off.
  • You can use an personal loan for anything. From emergencies and urgent expenses to long-term purchases and projects, these loans are appropriate for a range of personal uses.

Instant personal loans are now available online, through personal loan apps and via traditional lending institutions. Explore your options and shop around before choosing a lender and loan product.