When applying for any kind of credit, lenders determine your creditworthiness for securing themselves against any potential losses. RBI (Reserve Bank of India) has mandated that banks must check CIBIL score of every individual applying for a loan/credit card at the time of evaluation. A CIBIL report keeps the track of past repayment on credit cards and loans. Improving credit score with personal loan is an easy step which can get your CIBIL score up to a respectable position.
Improving with personal loans
Personal loan could be of great use for your financial emergencies as it does not need any security and also comes with less stringent formalities. Though not being so famous for being a costly borrowing option, when managed smartly personal loans could go a long way in enhancing your CIBIL score.
Personal loans for debt consolidation
Improving credit score with personal loans by debt consolidation is one of the prudent ways an individual can follow. Improving credit score with personal loans could work best for you when your personal loans are cheaper than most of the credit cards, you would save on interest charged on various credit cards and can replace it with a personal loan and know that single EMI on a personal loan is more manageable than several EMIs. Your CIBIL score will not shoot up once you pay off your debts. As you regularly make payments towards the personal loan, the CIBIL score would gradually recover and increase.