Are you spoiling your credit mix by taking personal loans again and again? Know what the loss will be if it goes wrong?
A personal loan should be taken only when you need money very much and are not able to arrange it from anywhere. If you take this loan again and again, then your credit mix can get spoiled due to this, and problems can arise for you in the future.
Personal loan is such a loan that you do not have to do much fuss to take it. If your CIBIL score is good and you are able to repay the loan, then it is easily available. That is why it is also called an emergency loan. But personal loan should be taken only when you need money very much and are not able to arrange it from anywhere. If you take this loan again and again, then your credit mix can get spoiled due to this and problems can arise for you in future. Know what is credit mix and what happens if it gets spoiled?
Understand what is credit mix
Your credit mix is determined by how many unsecured loans and how many secured loans you have taken earlier. Personal loans and credit cards both fall under the category of unsecured loans, meaning you do not have to mortgage any property etc. to the bank for these. If you have repeatedly taken unsecured loans in the form of personal loans or credit cards, but have not taken too many secured loans, then this deteriorates your credit mix and sends a message to the bank that you are short of funds and your dependence on credit is very high. This can make the bank doubt your ability to repay the loan.
What happens when credit mix deteriorates?
Deterioration of credit mix has a bad effect on your CIBIL score and your credit score can deteriorate. Due to this, you may have problems in taking loans in the future or you may get loans at expensive rates. However, if you have been taking both secured and unsecured loans when needed, and have also paid all of them on time, then your credit mix remains balanced and your CIBIL score remains better. As a precaution, most experts discourage taking unsecured loans more often.
What is the eligibility for personal loan
- If you are employed and your age is 18-60 years, then you can apply for a personal loan. On the other hand, the age of non-employed people should be between 21-65 years. However, the age criteria may be different in various banks.
- The minimum income for personal loan may vary in every bank / NBFC. In most banks, the salary of employed people should be at least 15000 per month to apply for a personal loan.
- Your credit score should be 750 or more. If it is less than this, you may face difficulty in getting a loan or the interest rate may be higher.
- If you have been working in an institution for at least one year, then you can be eligible for a personal loan. At the same time, after working in business for two years continuously, you can become eligible for a personal loan.
