- How a Gold Loan and CIBIL score are related to each other?
- Benefits of applying for a gold loan
- Know about the Gold loan eligibility criteria
Gold loan assistance is offered by every bank, financial institution, including NBFCs, and FinTechs. Compared to other loans with some fixed terms or conditions for using that funds, gold loans offer more flexibility to the customer to use the funds any way they want, for example, weddings, education loans, or any unexpected medical emergencies.
There is no credit score requirement for the gold loan. The main criteria for getting a gold loan is your precious gold. Being a secured loan, your collateral security and its purity are more important in getting quick approval.
To apply for a Gold loan, the most important documents required are:
Many individuals are dealing with the issue of a low CIBIL score, or no credit score. When these individuals apply for a loan, it becomes difficult for the lender to access such borrowers’ credit-worthiness. It is a situation akin to eggs and chicken. At that time, availing of a gold loan is the best way to kick-start with a good credit or repayment history.
Role Credit score plays in Gold Loan
Solving the problem
How to improve CIBIL score
A Credit score ranges between 300-900. Any score which is 700 or above is considered a good credit score. Your credit score helps the lender understand your repayment behaviour, past credit history, and how you are managing financial activities. If you make any kind of negligence in repaying the loan EMIs, it will affect your score.
If you want to build credit using a gold loan, it is necessary to know how you can build your score. When you take a loan against gold, all your EMI repayment data is submitted to the CIBIL at frequent intervals, so that they can update your credit score in your credit report.
Pay the EMIs regularly to repay the Gold Loan: Like any other form of a loan, the gold loan is also given at a set interest rate and tenure. If you want to build credit, it is a must to pay regular EMIs. All the payments made towards the gold loan are informed to credit bureaus by the lender. Regularly paying the EMIs is a kind of positive financial development in the life of a borrower.
Go with a disciplined approach: As a loan applicant, always apply for a gold loan with caution. They are undoubtedly the best way to boost a credit score with a low score or no score. But when you pledge your gold asset, you need to be sure that you are repaying all EMIs on time, as a gold loan is associated with a risk of losing your precious gold in case you fail to repay the loan in the stipulated period.
The lenders always evaluate the gold loan purity, i.e., high carat gold and weight, before approving a loan application. It is the current market value of gold. Most of the lenders are offering up to 80% of the market value. It is also known as ‘ Loan to Value Ratio.
The Reserve bank of India has set the LTV up to 80% of the lender. For instance, if your gold loan value is INR 1 Lakh, the loan amount could sanction up to INR 80,000.
So, you can get a gold loan with low CIBIL score, and meet all the financial requirements with ease at the platform of ShriRam City Union Finance. All gold ornaments pledged should fall within the range of 18-22Carat gold. In case you are pledging 24-carat gold, only gold coins are accepted, that too issued by banks, and up to 50 grams only, per customer.
Making prompt payment of gold loan EMIs will show responsible behavioUr, and the same is reflected when the lenders access your credit report. By seeing your credit-worthiness, we, ShriRam City may also offer you relaxation on offering interest rates in case you applied for a gold loan top-up.
In a nutshell, gold loans are one of the fastest emerging trends for getting a quick financial fix at the time of any of the financial contingencies and doing a CIBIL repair. Click here to get the best gold loan offers.