How does personal loan affect your credit

Know how Personal loan affect your credit and manage your loan through Loanyantra. Every now and then, you need a little help with your finances. A personal loan is one way to smooth your finances or get extra cash for a purchase. An unsecured personal loan can allow you to accomplish some of your goals without the need for collateral, or to share a specific purpose with the lender.

Personal loan interest rates, loan amount and tenure details – 

Bank Name Personal loan Interest Rate Minimum Tenure- Maximum Tenure Personal Loan Amount
Citi Bank 10.99% – 15.99% 1-5 years Max-30Lakhs.
Axis Bank 15.50% to 24% p.a. 1-5 years Min- Rs 50,000

Max-Rs 15 lakhs.

STANDARD CHARTERED BANK 10.99% – 14.49% 1-5 years Max- 30lakhs.
HDFC Bank 10.99% – 20.75% 1-5 years Max- 25Lakhs
FULLERTON 14% – 33% 1-4 years Max- 15lakhs
HSBC 11.29% p.a. to 17.5% up to 5 years Max- 30 lakhs
ICICI 10.99% to 22.00% per annum 1-5 years Max- 20lakhs
IDBI 12.75% to 13.75% up to 5 years Min- Rs. 50,000

Max-10lakhs

SBI 12.90% – 14.90% 5 Years Min- 25,000

Max- 15 lakhs

The above table lists the lenders with whom loanyantra.com has tie-ups. About every bank’s personal loan interest rates, you find at the end of the article.

But whenever you get any loan, it’s important to consider the impact on your finances and on your credit. It is always better to consider the personal loan affect on credit.
Before you apply for a personal loan, consider the credit score factors that are likely to be a part of the equation. Any debt impacts your credit — and that means a personal loan can affect your situation as well.
But that doesn’t mean the effects of a personal loan will be all negative. In fact, when used properly, a personal loan can have a net positive impact on your credit, and that means it can also have an effect on your life and finances beyond just your credit rating.

What happens to your credit when you apply for a personal loan? How does personal loan affect your credit?

When credit score calculated by CIBIL, there are five main credit score factors that each carry a specified weight:
Payment history: 35%
Amounts owed: 30%
Length of credit history: 15%
New credit: 10%
Credit mix: 10%
With a personal loan, the main things that affect your credit score fall under the categories “length of credit history” and “new credit.” When you apply for a personal loan, that represents an inquiry that will show up on your credit report and impact your credit score.

Things change if you are making a lot of credit inquiries in a short period of time, however. The more loans you apply for in a short timeframe, the bigger the impact on your credit history.
Your new credit will also have an impact on your credit history. Part of the calculation of credit history is the average age of your accounts. A new credit account, like your personal loan, brings down the average age of your accounts.
However, the impact shouldn’t be too huge, as long as you don’t have a lot of newer credit dragging on your score.
Once you get your personal loan, it’s important to pay attention to how you manage personal loan affect credit score, since that’s what will matter most to your credit score going forward.

Don’t let a personal loan bring down your credit score

Simply getting a personal loan isn’t likely to have a long-term negative impact on your credit. You might be surprised to discover that a personal loan can actually help your credit score in the long run.
Of the credit score factors, the most important item is your payment history.
As long as you make your loan payments on time and in full, your score will be impacted positively. The more on-time payments you have, the better your credit score.
With a personal loan, factors that affect credit score most are the payments you make and the mix that your loan adds to your credit profile.

Adding a personal loan to your credit mix can actually give your score a little boost. While credit mix is only 10% of your score, it can still provide a little help. Showing that you can handle an instalment loan as well as a revolving credit loan (such as a credit card) can add to your score.
The opposite is true, too. If you miss payments on your personal loan, you will be penalized. When you get any type of credit, it’s vital that you make regular payments in order to prevent damage to your credit score.
A personal loan is most dangerous to your credit when you don’t make payments.

Only borrow what you need

Any time you borrow money, it is important to limit your loan to what you need to accomplish your goals.
A personal loan can be a way to consolidate your debt to make it easier to pay off, or to help you smooth your cash flow while you restructure your finances. No matter what you use your personal loan for, don’t borrow more than you can handle and avoid paying late.
Your instalment loan won’t have the same impact in the credit utilization measure of your credit score, but it can still impact decisions about your finances in the future.
Lenders and others look at your credit file for red flags. If you have a large personal loan, it can affect your ability to get other credit and financial products, even if you have a good credit score. Lenders and others assess risk, and a large personal loan can make you a bigger financial risk.

Personal loans can help your finances, and even provide a boost to your credit, but you need to be careful about how you apply for and use them.

Personal loan interest rates (as of May 08th 2018)

Bank Personal Loan Interest Rates
Citibank 10.99% – 16.49%
SBI Personal Loan 12.50% – 16.60%
HDFC Bank Personal Loan 10.99% – 20.00%
ICICI Bank Personal Loan 10.99% – 22.00%
RBL Bank 13.99% – 16.00%
Canara Bank 13.65% – 13.65%
Dena Bank 13.00% – 14.00%
Union Bank of India 14.40% – 14.40%
Vijaya Bank 12.50% – 13.50%
Andhra Bank 13.05% – 14.30%
Allahabad Bank 13.10% – 13.10%
Bajaj Finserv 11.99% – 15.50%
Standard Chartered Bank 11.49% – 20.00%
Bank of Baroda 11.60% – 16.60%
Corporation Bank 12.75% – 13.75%
IDBI Bank 13.20% – 13.75%
Indian Bank 14.35% – 14.85%
IDFC Bank 11.00% – 19.50%
Axis Bank 11.25% – 24.00%
Tata Capital 11.99% – 18.00%
Fullerton India 14.00% – 34.00%
IndusInd Bank 11.99% – 23.00%
Kotak Bank 11.50% – 24.00%
IIFL 12.99% – 19.99%
Yes Bank 11.99% – 20.00%
Bank of Maharashtra 15.10% – 15.10%
Federal Bank 13.32% – 15.12%
Indian Overseas Bank 12.70% – 15.25%
Syndicate Bank 14.20% – 14.20%
Karur Vysya Bank 13.90% – 16.40%
Punjab National Bank 12.25% – 15.25%

Why go through Loanyantra for a personal loan –

Loanyantra, an online platform for all your financial needs. It is India’s first ever fintech company to manage your loan till the closure. Usually, you find personal loan interest rates are a little higher when compared to any other loan interest rates. Here is when loanyantra helps you getting a personal loan at the best rate and also get alerts as long as you are in the loan about the current market interest rates. Also avail wonderful offers like cashback and referral offers by getting a loan through loanyantra.com.

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