Until a few years ago, credit scores and TransUnion Credit Information Bureau (India) Limited (CIBIL) report were not something that people used to worry about. Thanks to the Internet, nowadays, more and more people have started to become aware of these factors along with their impact on the loan application. You surely understand that a good credit score over 750 can help you get your loan application approved.
A gold loan can help you with that immensely. If you are wondering how then read on.
How gold affects the CIBIL Report
- When you are taking an individual loan, always try to use your gold coins or jewelry as security. This will make it more time-saving for you as gold security requires less paperwork
- The gold loan interest rate may vary from lender to lender. However, considering the current rate, taking a loan against gold can benefit you the most. This way, you can put your gold into good use
Also read: Gold ETF – Best Form of Investment in Gold
- When you are applying for a personal loan, the approval depends on your CIBIL score. This means, if your credit or repayment history is not favorable, you might not get any loan, as that results in a bad CIBIL score. However, gold loans affect your CIBIL report positively. This is why loans against gold have become popular
- The gold loan service providers will ask you for an address and an income proof. However, those are the only documents you will need to get the loan. That surely is more preferable for anyone
There are other benefits of it too. Here are the best ones:
- Offers productive use storage
- Facilitates faster approval
- Provides lower interest rate
- Provides subsidiary benefits from the government
The direct effects of gold loan on your credit score
When you are applying for a loan against gold jewelry, you are giving your lender the asset as a security. You will get the gold jewelry back once the loan is completely repaid. This is a secured loan, so it makes your credit score better. The one thing that you need to be careful about is the regular interest payments. If the change in the value of gold results in late repayment then your credit score will be affected negatively.
Also read: Gold: Shining Investment
There was a time when getting a loan against gold was considered a sign of weakness. However, people are now more aware of the fact that an idly sitting gold jewelry is a waste of an opportunity to grow your assets. The most respected and trustworthy lending corporations have now started to provide attractive loan-related deals against gold.
Once you understand how the gold loan affects your credit score and CIBIL report, you can utilize the asset more effectively to improve your chance of getting your loan applications approved.