Gold Loan and Credit Score

Gold loans and credit scores are related to one another in ways that can uplift one’s credit score or make it fall even lower. We will be further discussing gold loans and credit score and try to understand the relation between them and how to utilize them in the correct way. One can apply for SBI gold loan to get the best offers

We will take a look at the reasons so as to why one should opt for a gold loan scheme:

• Fast processing – The process of getting a gold loan credited is very fast as there is not much paperwork involved in the procedure. Unlike other loans, there is no need of working over documents for days just to get the loan approved. The loan approval takes some time but is mostly done within a week of time. After the approval, the money is credited within minutes.
• Flexible utility- As this is a secured loan the lenders are not much concerned about what the borrower is supposed to do with the credit. After crediting the loan you can utilize the money for multiple purposes according to your need and convenience.
• Lower interest rate- Gold loans come with a minimal interest rate as compared with other loans and credit cards. These gold loan interest rates are monitored by the global standard of gold’s value prevalent during that time when the loan is applied.
• Liquidation of Ideal assets- Gold does not only have aesthetic value but also added financial value to it. Thus these gold assets which are mostly kept inside lockers can be used during hardships and times of emergency. These gold assets can act as liquid cash during such situations. This is what a gold loan does, it liquidates cash instead of gold collateral which can later be claimed after repayment of the entire credit.
• Early closure- Gold loans do not charge for pre-closure of accounts before the tenure is over. This is one of the best qualities of a gold loan scheme. Sometimes a borrower who had credited a gold loan might be willing to pay back the credit in ransom and further close the account. This procedure can be possible in other loans, but they charge extra fees for the purpose.
• Improved credit score- Getting a gold loan can also benefit you by increasing your CIBIL score so as to benefit you in the future. Regarding this, we will be discussing it further.

Gold loans and improved CIBIL score-

As mentioned in the last point that a gold loan helps to increase CIBIL score, it is true. Further, we are going to find out the facts and reasoning behind this. A credit score shows an individual’s creditworthiness in terms of numbers. It is ideal to have a credit score around 750 or at the best a score of 800 will possibly get you any loan granted. Though all the borrowers do not have the perfect credit score and it needs to be increased. Any of the borrowers out there seeking a loan is probably not getting a loan for their poor credit score. In such cases where the debtor does not have a good credit score, it is most suitable to apply for a gold loan as it is based on the provision of collateral and thus the lender does not feel the need of checking one’s creditworthiness.

However, if you take up a gold loan and further repay your installments in due time over a certain tenor, then it is considered that your credit score will be affected in a positive way. Paying timely installations can lead to the growth of one’s credit score which might be useful in the future for getting some other loan granted.

The further gold loans must be used cautiously as it can prove to be a huge mistake if not utilized properly. A borrower crediting the money from gold loans should also keep in mind regarding his or her repayment tenure as the gold assets are mortgaged to the lenders. If money is not repaid back within the due course the lender will not hesitate to sell the collateral to ear the credit