How Are Gold Loan And CIBIL Scores Related To Each Other?

Chandra Shekar

The majority of banks, financial institutions, NBFCs, and FinTech’s offer gold loan assistance. In contrast to other loans with certain terms or conditions for using the money, gold loans offer greater flexibility for the customer to use the money however they want, for example, for weddings, education loans, or any unexpected medical emergency. The gold loan does not require a credit score. Your precious gold is the main criterion for getting a gold loan interest rate. It is more important for your collateral security and its purity to get your loan approved quickly since it is a secured loan.

Gold loans have the following benefits:

Processing is quick.
There is little documentation required.
The interest rate charged is lower than that of other types of loans.
Flexible use of the funds on both ends.
Processing fees are not charged.
Foreclosure fees are not charged. It is possible to close a loan at any time.
No additional interest charges for easy repayment options.
Gold loans have the advantage of assessing the loan amount based on the current market price of the gold, regardless of the price at which you purchased the gold.
Gold loan ornaments kept as collateral by financial institutions are triple-layered protected. All gold jewelry pledged by applicants is kept in a separate vault by the banks or financial institutions.

The importance of credit scores in gold loans

There is an association between loans and CIBIL scores. The lender considers the credit score an important factor when assessing a potential borrower’s creditworthiness. However, gold loans differ somewhat. A secured loan is where the borrower lends their gold ornaments to the bank or financial institution from where they are seeking a loan. By having a good CIBIL score, you can make gold loans that exceed the limits of your bank or financial institution. Gold loan approval is not based on these factors, only a basis for extending a huge credit line. Low CIBIL score loans are also called gold loans.

Moreover, a gold loan can help a borrower repair his or her CIBIL score. A gold loan is an ideal financing alternative for urgent funding needs, especially when they are low-interest loans with a quick disbursal time and easy EMI options. The gold ornaments must be pledged, and minimal documentation is required.

You can build good credit by paying your EMIs and interest duly and building a good repayment history.

How you can Increase your C-Bill

There is a range of 300-900 points on a credit score. Credit scores above 700 are considered good. A credit score provides lenders with information about repayment behavior, past credit history, and how you are managing a gold loan calculator. If you fail to pay your loan EMIs on time, your credit score will be affected.

Using a gold loan as a tool for building credit requires you to know how your score can be increased. CIBIL receives all of your EMI repayment data at frequent intervals so that they may update your credit score in your credit report.

The gold loan can also be repaid by making regular EMI payments: The gold loan is also given at a set interest rate and for a set duration. Paying regular EMIs is essential if you wish to build credit. The lender notifies credit bureaus of all payments made towards the gold loan. Borrowers who pay their EMIs regularly experience positive financial development in their lives.

Applicants for gold loans should adhere to a disciplined approach: Always apply with caution. Undoubtedly, they are the most effective way to boost a credit score if you have a low score or none at all. However, in the case of a gold loans, you should be sure that you are repaying all EMIs on time since if you fail to repay the loans within the stipulated time, you may lose your precious gold.

What factors do lenders consider when determining gold loan eligibility?

Before approving a loan application, the lenders always consider the gold loan purity, i.e., high carat gold and weight. Gold is currently trading at a fair price. Loans are being offered up to 80% of the market value. It is also known as the loan-to-value ratio.

The Reserve Bank of India sets 80% of the lender’s LTV. For example, if you seek a loan for INR 80,000, the loan amount could be sanctioned up to 1 Lakh.

Conclusion

Rupeek offers gold loans with low CIBIL scores so that you can meet all your financial obligations with ease. Ideally, pledged gold ornaments should be between 18-22 karats. When pledging 24-carat gold coins, only banks issued up to 50 grams are accepted.

The lenders view your credit report as a reflection of your creditworthiness when you make fast gold loans EMI payments. Rupeek may also offer you a lower interest rate if you apply for a gold loans top-up based on your creditworthiness.