CIBIL Score for Gold Loan

What is a Gold Loan

A gold loan is the source of finance that the borrower obtains from the lender by offering their gold items as collateral. Based on the gold's current market value and purity, a fixed percentage of the gold, typically up to 80%, is loaned. 

 

Gold loans have no restriction on how the money may be used, unlike some other loans, such as car loans. A gold loan can be utilised for any purpose or to purchase multiple accessories and devices that are linked. While gold loans can provide you close to 100% of the value as a loan sum, vehicle loans typically offer only up to 80% of the car’s on-road cost.

 

These loans can be obtained easily and conveniently online. With pre-approved offers on loans and other financial services, Bajaj Markets streamlines the application procedure even further. Just enter a few simple details to receive your pre-approved offer.

Minimum CIBIL Score for a Gold Loan

There is no minimum CIBIL score required for a gold loan. As this is a secured loan, the security of your collateral and its purity are much more vital in obtaining speedy approval.

 

A gold loan will assist people who require funds but have a poor credit score. So, if you are wondering, ‘does a gold loan affect CIBIL?’ then yes, a gold loan affects the CIBIL score significantly. This will have a higher influence on your score than a non-secured bank loan. 

Importance of CIBIL Score for a Gold Loan

Lenders may offer a gold loan as a type of financial support with the understanding that payments would be completed on schedule, and your ability to handle your credit payments is reflected in your credit score.

 

The RBI has mandated that the CIBIL score be checked before processing any type of loan. In the case of a gold loan, gold assets serve as a security for the bank even when the CIBIL score is low. 

 

As a result, by pledging your gold as collateral, you assure the bank that you will pay back the loan on time.

How does Gold Loan Affect CIBIL Score

In addition to being beautiful, gold is significant as a source of financial stability. You can take advantage of a gold loan provided by several banking institutions to compensate for a cash shortage. It's crucial to comprehend how a gold loan affects the CIBIL score:

 

1. Applying for a Gold Loan: Just applying for a gold loan can reduce your CIBIL score, even if it is only by a few points. Lenders essentially perform a hard enquiry when they ask bureaus to submit a report of your CIBIL scores so they may decide whether to approve or deny your loan application.

2. Repayment on Time: If at all possible, pay your EMIs on or before the deadline. On-time payments will begin to increase your CIBIL score. 

3. Refrain from Collateral Auction: This must not be done at all, even though some lenders may be forgiving and not penalise you for one or two EMI payments that are late, this may harm your credit score and have a negative impact on your gold. Budget-stretching is okay, but avoid skipping repayments at all costs.

4. Default on a Loan : If you do not repay your gold loan under the loan contract, you are in default. Even a day's delay in completing loan payments is notified to all bureaus in India, who subsequently add this information to your credit report, decreasing your credit score drastically.

How to Ensure a Higher CIBIL score with Gold Loan

Regarding transactions involving gold loans, there are some actions you may do to genuinely improve your CIBIL score.

 

• Quick payment: Pay back the gold loan as soon as you can by making the required monthly instalments on schedule.

• Adjust your repayment schedule: Even if you are unable to pay a few EMIs, make sure you don't let the amount accumulate to the point where the lender is obliged to sell your collateral gold items to recoup the remaining loan balance.

• Avoid collateral auctions: Since gold loans are one of the most practical types of secured loans, lenders are also accommodating when it comes to repayment or missed or delayed EMIs. You can also borrow money from close friends, family members, or relatives in this case to cover the necessary EMI payments for the gold loan. This will guarantee that you do not forfeit your priceless asset, and it will make it simpler for you to repay the money you borrowed from family or friends than the bank.

Overall, a gold loan affects the CIBIL score; so, to begin:

 

• You must apply for loans on time and avoid excessive borrowing. 

• Furthermore, to increase your credit score, you must make sure that you repay debts on time.

• Finally, if you have a habit of forgetting due dates or are exceedingly busy, you should be wary of deadlines. Use electronic alerts or reminders to help you pay your loan obligations on time. 

By following these easy procedures, you can ensure that you never miss a payment on your gold loan, keep your gold assets and keep your CIBIL score from declining.