Highlights
Personal loan is the easiest way to take a loan today. If your credit score is good then any bank gives you a personal loan, but personal loan has a great impact on your credit profile. Let us know in detail…
negative impact
- By taking a personal loan, your debt increases and due to this your debt to income ratio gets spoiled. In such a situation, when your debt to income ratio is bad, banks avoid giving you loan in future. At the same time, you get loan at higher interest rates than normal.
- Taking a personal loan has a negative impact on your credit score. At the same time, if you repeatedly take personal loan, your credit profile also gets spoiled. For this reason, one should avoid taking personal loans again and again.
- The interest rate on personal loan is higher than other loans. If your credit score is not good then you may have to pay higher interest on personal loan.
- If you are unable to repay the personal loan on time and the bank classifies your loan as NPA, then its effect remains on your credit profile for a long time.
Positive impact
- If you pay your personal loan installments on time, it will have a positive impact on your credit score in the long run. In such a situation, you will be able to take personal loan at very low interest in future.
- Taking a personal loan improves your credit mix. This has a positive impact on your credit score as you are able to manage your loan well.
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