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This is called a credit enquiry. If for any reason your loan application is rejected, the credit enquiry is likely to impact your credit score, as too many credit enquiries tend to have a negative impact on your credit score. However, if you loan is approved, and you demonstrate that you can make timely repayments on the loan, this has a positive impact on your credit score, as you build good credit history. Also remember, that once you get a loan, it impacts the amount of incremental credit you can obtain for a given level of income. In other words, just because you have a good credit score and are considered 'loan eligible' just now, it does not mean that you can get any amount of credit - it is dependent upon your monthly income and your current monthly obligations. In summary, obtaining a personal loan and maintaining a good repayment track record is essential to building a good credit score. It might be a good idea to replace high interest credit card debt with a lower interest personal loan. The EMI on the personal loan also forces a minimum repayment discipline. However, you need to ensure that once you have repaid the old credit card, you do not rebuild the credit card debt once again. This is likely to cause a much larger problem in the future, if you are not careful.

The criteria varies across different lenders depending upon the borrower’s profile and the relationship with the bank. A few basic requirements and limits that are applicable for most of lenders are outlined below: Minimum age limit: 21 years Maximum age limit: 60 years Employment Type: Salaried/Self-employed professionals/non-professionals Employment Status: Employed/In-business for at least 2 yrs., at least 1 yr. with current employer/business Minimum Income: Rs.4,000 - Rs.20,000 net income p.m. (varies according to area - usually higher in metro cities) Maximum Loan: Amount up to Rs.50 lakhs (based on income, repayment capacity and existing EMIs) Minimum Credit Score: At least 700

A credit score demonstrates the credit bureau's evaluation of an individuals probability of default, based upon historical information available with them from numerous data points that they evaluate. Besides the credit rating obtained from the credit bureau, individual lenders might use criteria like negative PIN codes, negative occupations, positive employers lists, positive educational institutions as additional crediteria when making a lending decision. These are all based upon their individual credit experience and will vary from one lender to another.

Whether the payment is partial or full, it impacts your credit score only when you default. A settlement (meaning a final repayment that is less than the full contractual repayment) will be visible in your credit report and is likely to impact your ability to raise new credit in the future. However, making a full payment, after defaulting for a few months, will help you in regaining some points that you might have lost during the period of default. Merely prepaying a loan on which prompt historical payment have been made does not impacts your credit score.

There are a lot of benefits in a credit card loan, as they are much more secure and meant for customer comfort, but the drawback with them is that they have high interest rates that are way more as compared to a personal loan. In case of personal loans, the interest rate is lower but they are not really secured and it could take longer to obtain one. Therefore, it depends a lot on a person’s credit or specific individual needs on which one to pick.

All personal loans will be at a Fixed rate, and therefore, prepayment charges may apply. You will have to check with your lender.

1. Personal loan 2. EMI facility on credit card: If the amount of expenses that you are planning to incur can be done through a credit card, then do the transaction from your credit card and convert that transaction payment into EMI’s. They could work out to be cheaper than the personal loan charges. 3. Loan on card: If the amount of expenses that you are planning to do cannot be done through credit card, then you should ask the bank whether you are eligible for a loan on card. The benefit of loan on card is speed, hassle free and charges may be at par with personal loan. 4. Revolve on credit card: Do the transaction on credit card and eventually pay down the amount by revolving. Not recommended on account of high interest rate.

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