Does gold loan affect cibil score?

Written by Web Desk Team | Published :July 11, 2023 , 11:16 am IST

A gold loan is a type of secured loan where you can borrow money from a lender by pledging your gold ornaments or jewelry as collateral. The lender evaluates the value of the gold and provides a loan amount based on a certain percentage of its appraised worth. The number of people applying for gold loans is steadily increasing in the past time. However, most people still don’t have clarity on this type of loan.

For instance, most people don’t know that taking a gold loan can potentially affect their CIBIL score.

When you take a gold loan, the lender may report your loan details, such as the loan amount, repayment history, and any defaults or delays, to credit bureaus like CIBIL. This information becomes a part of your credit history, which is considered when calculating your credit score.

If you make timely repayments on your gold loan and fulfill all the loan obligations, it can have a positive impact on your credit score. It shows responsible credit behavior and helps build a good credit history.

On the other hand, if you default on your gold loan payments or make late payments, it can negatively affect your credit score. Defaults and late payments reflect poorly on your creditworthiness and can lead to a decrease in your credit score.

It’s important to note that a single gold loan may not significantly impact your credit score but if you have multiple loans or credit facilities and face difficulties in managing them, it can have a more substantial impact on your creditworthiness.

Remember to always make timely repayments on your loans, including gold loans, to maintain a good credit score and avoid any negative consequences on your creditworthiness.


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