Does Gold Loan Influence Credit Score

Credit or loans are financial instruments which are given to you by lenders with a trust that you’ll pay the bank on time. A credit score reflects how you handle your loans and credit lines responsibly. So, the answer to your question would be yes, gold loans do influence your credit score.

On the other end of the spectrum, if you neglect payments, you’ll only hurt your credit score, which can take a lot of time to repair again. If you want to get access to loans at all times, it is important to handle credit carefully. To do that, you need to know about the different ways in which a gold loan can help increase your credit score.

To help you understand this subject better, here are a few points.

1. Gold loan applications: Bet you didn't know that applying for gold loans impact your credit score? That’s right! Just by applying for a gold loan (and it’s not Loan for Gold, by the way), can reduce your score by a few points. But how? This happens because each time you apply for a gold loan; a hard inquiry is initiated by lenders. Hard inquiry is when lenders tell credit bureaus to assess your credit report. They determine whether your application will be approved, or not. Such hard inquiries reflect on your credit report, and therefore on your credit score. If you apply to too many gold loans in a short time, it’ll show that you are loan-hungry, or spend a lot. You won’t be getting any new loans that way. You can avoid this by applying for a gold loan through mymoneykarma! With a single, quick application, we find you the best Gold Loan deal from across national-level lenders.

2. Gold loan payments: If lenders do accept your application, you will have to repay as per their terms and conditions. If you meet these, your credit score will be boosted. This is really helpful, as repayment is made very easy for gold loans, due to flexible repayment schemes and low interest rates.

How do gold loan payments affect your credit score?

It is important to make payments before or on time, if you want to make a good credit score over time. When you pay EMIs regularly on time, it tells you are responsible and credit worthy. It makes you more attractive to a borrower because they know you’ll always pay back on time. Lenders always give more preference to such customers. They can even lower the interest rates a bit for you!

Loan default

A default happens when you do not meet the gold loan repayment obligations according to the lender’s contract. Even if the delay is that of one day, the credit bureaus get to know about it from your lender. And that lowers your credit score substantially. In addition, you also attract charges for paying EMIs late. If you continue to pay EMIs late, you’ll get a legal notice from them, which can enable the bank to possess your gold article. 

In conclusion

You know by now how a gold loan can influence your credit score. Multiple applications lower the score, and making regular EMI payments boost it. Don’t miss the payment date. Set a reminder if you have to. Your credit score depends on it.