Vivid News 24: In the current market of cheap prices, the average person needs a lot of money. And for this reason, regular people are turning to borrow. The loan company business is now booming. Gold loans are also in high demand right now, along with vehicle and home loans.
Many people think getting a loan secured by gold can raise your credit score. But there is no clear justification for why this theory will always be accurate. Taking out a gold loan frequently lowers a person’s credit score. It can be seen that if a person wants to take a gold loan, the bank or financial institution looks at the credit report first. This is called Hard Inquiry.
It is not possible to get a loan without it. If this report shows, a person is repeatedly borrowing or borrowing more than necessary then the credit score is adversely affected. For example, if a person keeps on increasing the gold loan and is unable to repay the interest in installments, the credit score is affected.
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What are the consequences if the loan is not paid?
Currently, if a person does not repay the loan in installments, it can have a terrible impact on the CIBIL score. On the one hand, the CIBIL score will go down. On the other hand, mortgaged gold can also be auctioned by companies.
Why does the CIBIL score go down?
As a general rule, if a person takes a gold loan, the CIBIL score is affected. However, if the EMI or monthly installments are deposited on time, the credit score automatically increases. And finally, if you can withdraw the gold, your credit score will also increase very quickly. Every time you make an installment payment, the credit bureaus know it and it is reflected in the credit score.
When is it right to take a gold loan?
As a general rule, gold loan companies will get 90 percent of the gold price as a loan. In this case, if the loan is not repaid, the gold can be confiscated. So when a small amount of money is required, which can be repaid later, gold loans can be relied upon.
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