Gold is valuable not only in terms of beauty but also as a provider of financial security. To meet a shortage of funds, you can take Gold Loans offered by several financial institutions. However, it is essential to understand how such a Gold Loan might affect your credit score.
Whenever you take a loan or credit, it reflects on your credit score. A credit score essentially reports how you repay the loans you take and how responsibly you handle any credit payments. If you are regular with making payments, it positively affects your credit score, whereas if you behave negligently while making such payments, it can lower your score. In order to better understand how a Gold Loan affects your CIBIL score, you should be aware of the key aspects listed below.
Applying for a Gold Loan
Simply applying for a Gold Loan can have an impact on your credit scores. When you apply for a Gold Loan, the lenders conduct a hard enquiry regarding your credit scores. Basically, a hard enquiry is conducted by lenders when they ask credit bureaus to send across a report of your credit scores to determine whether they should approve or reject your loan application. These enquiries are reflected in your credit report. Find out how to apply for HDFC Bank Gold Loan right here.
A few hard enquiries have no effect as such; however, the problem is if there are too many hard enquiries regarding your credit in a short time. It serves as an indication that you are credit hungry. It essentially means that you are in desperate need of a loan or borrow more than you require. Both of these are not good signs and can negatively impact your credit scores, reducing them by a few points. Thus, it is crucial to apply for loans carefully and preserve your credit rating.
Repaying a Gold Loan
How you repay your loan instalments also reflects on your credit. Generally, repaying loans on time has a positive effect on your credit scores. Lenders tend to prefer borrowers who return the loan on time and approve applications for Gold Loans made by such persons.
If you default on paying a loan, it shows up on your credit report. Even a day’s delay gets reported to all the credit bureaus and can influence your credit. If you pay the instalment within 30 days of the due date, you will be charged late payment fees and other nominal charges as well. However, if you do not pay within 90 days of the due date, you will get a Non-Performing Asset label on your credit report. This tag bars you from receiving a loan from other lenders in the future. Further delay in repayment will lead to a legal notice, and the gold articles pledged for the purpose of the loan will be sold off.
All in all, a Gold Loan can have a substantial effect on your credit scores. Firstly you must apply for loans in a timely fashion and avoid borrowing too heavily. Secondly, you must ensure that you repay loans on time to improve your credit score. Lastly, if you tend to forget due dates or are extremely busy, you need to be cautious about due dates. Rely on technological alarms or reminders to help you pay your loan dues on time. Certain financial institutions also allow you to clear your dues on time. By activating the auto-debit facility, you can ensure that the amount due is withdrawn from your account by the financial institution and put towards the loan repayment.
Click here to read more on how to repay your Gold Loan efficiently.
HDFC Bank Gold Loans
At HDFC Bank, we realise the difficulty of arranging funds to meet certain expenses. Furthermore, we aware of the financial value that an asset like gold can offer and its security. Thus, we offer Gold Loans at affordable interest rates and tenure that ranges from 3 to 24 months. Starting at Rs. 25,000 HDFC Bank also has a quick disbursal and online application process.
Explore HDFC Bank Gold Loan and apply for one by clicking right here.
*Terms and conditions apply. Gold Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.