To reply to your question on does personal loan affect CIBIL score, the answer is Yes. Taking a personal loan does affect your CIBIL score in ways that can be both good and bad, depending on how you handle it.
When you apply for a personal loan, the lender pulls your credit report, which creates a hard inquiry. This can cause a small, short-term drop in your CIBIL score.
The biggest factor in your credit score is your payment history. If you pay your EMIs (monthly repayments) on time, it positively influences your score.
Conversely, late payments are very damaging. A single missed EMI can lead to a score drop of 50–100 points, depending on how late it is.
Also, defaults or long-term non-payment can stay on your credit report for years, hurting your future credit potential.
Does a Personal Loan Affect Your Credit Utilization?
Yes. Personal loans are installment loans. Having a mix of different types of credit (like both credit cards and loans) is seen favorably by credit bureaus. This credit diversity can help your CIBIL score over time, as long as you manage the loan well.
While credit utilisation is more directly tied to revolving credit like credit cards, taking an unsecured loan still increases your overall debt.
However, a personal loan can sometimes lower your credit utilisation ratio (because it's not part of your credit limit), which is a positive.
Having too many loans or frequent loan applications can be risky. Multiple hard inquiries and increasing debt may drag down your CIBIL score. Lenders usually check not just your score but also your existing obligations, so over-borrowing is not advisable.
If you consistently pay on time, over the duration of the loan, your credit profile strengthens. On-time loan payments build a strong repayment history and demonstrate financial responsibility. I hope you found this information helpful.
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Does Personal Loan Affect CIBIL Score?
shivam
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2025-11-24T07:27:56+00:00 2025-11-24T07:27:58+00:00Comment
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