How Can a Loan Impact Your Credit Score?

How Can a Loan Impact Your Credit Score?

Your Credit Score acts as a guarantee of loan repayment for sure, but how does a loan affect your credit score?

1)    Inquiry

         ● When you apply for a loan an inquiry is raised to know your credit score
● All such inquiries raised, are recorded in your credit report
● This may have a positive or a negative impact, depending on your credit history.
Note: Multiple inquiries have a negative impact on your credit score.

2)    Regular Payment

         ● Your repayment schedule is recorded by credit bureaus
● If your EMI is not paid regularly, it has a negative effect on your credit score

3)    Credibility

          ● When your EMI is paid regularly, your credit score increases.
● A high credit score is equivalent to high financial credibility
● This helps you receive fast approvals on your business loan applications

4)    Better Interest Rates

          ● Your financial credibility determines the RoI for your loan
● When your credit score is high, your RoI is low and vice-versa

Maintaining a high credit score is always beneficial for any businessman. It paves the way towards a journey of growth and expansion.

Posted on