A strong credit score is very important to get a long term loan. Banks and NBFCs consider a minimum of 750 as a good credit score. The better score you have the better loan deals you get. There are various ways by which you can build a strong credit score. One of them is taking a personal loan. Personal loans are easy to get. You can easily get a personal loan with minimum credit score and use it to make your score stronger. Here are the reasons why you should take a personal loan to build a strong credit score.
Use funds for debt consolidation
Having multiple debts like car loan or credit card outstanding reflects badly on your credit score. By taking a personal loan you can easily pay off the outstanding debts. This way you have lesser debts and have to pay only one interest rate for one personal loan. Your credit score will be improved as you have lay off your multiple debts and now paying only one. Debt consolidation surely proves fruitful to create a strong credit score.
Pay EMIs on Time
When you take a personal loan, make sure that you pay the EMIs on time. Paying the EMIs on time showcases your financial stability in handling a debt. Thus timely paid EMIs play a major role in determining your credit score. So when you take a personal loan, apply for an amount which you will be able to payback easily.
Don’t pre-pay your loan
Make sure that you do not pay off your personal loan before the tenure ends. The longer credit history is considered better to build a strong credit score. So if you make timely payment throughout your longer tenure, your credit score will get stronger.
Are you looking to build a strong credit score? Then apply for a personal loan