It is an old adage that a friend in need is a friend indeed. This is applicable now not just to humans but also to institutions and concepts that we hold dear in our day to day lives and financial aspects.
For example, we can easily characterize a personal loan in this fashion. This kind of loan can be easily availed from a regular bank or an NBFC or a digital lender with whom you have a relationship and which in many cases is also is the issuer of your credit card.
Factors that affect your credit score
- Non-payment or late payment of credit card bills or loan EMIs
- Consistently using more than 75% of the credit limit or frequently maxed out cards
- Paying only the minimum due on credit cards
- Possessing too many lines of credit especially unsecured forms.
Although many of us tend to overshoot our credit limit and then get by paying the minimum amount to keep afloat, this situation can easily escalate into a bad one sooner than we can realize.
It tends to worsen when we cash out one card and to fend off that liability, we use another card to pay off that debt or worse spend from the other credit card in turn, making ourselves more vulnerable than we were before. Instead, you could have a look at another option available and that too at a lesser rate of interest, namely, personal loan.
Contrary to the belief that we can cash-out our credit cards and then repay most of the charges, it has proved to work on the contrary. Hence, regardless of the nature of expenditure on the credit cards, it does reflect on your credit score, which would go downhill in such a situation. Hence, it makes better sense to take care of your credit card spends and keep them in check.
However, if you are the kind of a person that does require funds on a regular basis, then, of course, the best possible solution to avail is a personal loan that, you can apply for and pay off all the debts in order to have a clean credit score.
About Personal Loans
Of course, there are plenty of reasons apart from the ones discussed above to use the option of a personal loan when it comes to taking care of financial requirements or even other debts that you may have accumulated over the years.
- A personal loan is a better and cheaper alternative than credit cards when it comes to interest rates.
- Secondly, you will be able to save on the interest that is charged on many different credit cards when you choose to pay the same with a personal loan.
- A third reason is that a single EMI is always more manageable than multiple EMIs.
These key facets, if dealt with tactfully, will over a period of time gradually improve your credit score.
To conclude, if you wish to enjoy the benefits of readily available funds along with keeping your credit score in check, personal loans are the way to go forward!
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